Apr 22 2022
All-inclusive container rates into North America were rangebound at depressed levels during the week ended April 22 amid weak demand for cargoes out of Asia.
As many North Asian cities and production regions remain under lockdown, US cargo owner sources indicated that Asian exports were increasingly difficult to book, compounded by a raft of port omissions on the part of ocean liners. Despite this, demand remained low, as the market is off-season.
"Not seeing anything in five digits," a North American forwarder source said. "No premiums at all, I don't know if that's just temporary because of what's happening in China."
During the week ended April 22, S&P Global Commodity Insights heard scant all-inclusive rates on the North Asia-North America run at slight premiums to market FAK rates, although significant pockets of FAK space were available out of North Asian gateways, particularly on bookings made with new entrants and charter players.
Sources pegged inbound premium rates at just $1,000-2,000/FEU above base rates for prompt loadings.
While booking activity remained muted against pre-Lunar New Year demand, sentiment held that purchasing and resultant rates were primed to hike from mid-May onward as the market pivots towards the traditional peak import season.
The all-inclusive premium rates on the Southeast Asia-North America route were largely stable in the week ending April 22.
The all-inclusive container freight from Southeast Asia for East Coast North America was heard at $17,000-$18,000/FEU and at $15,000-$16,000/FEU for West Coast North America, sources said.
The all-inclusive premium rate was steady despite softening of the basic FAK rate on the Southeast Asia-West Coast North America route. Basic freight on this route dropped by $1,700/FEU on the week to $7,800/FEU, as shippers preferred to route cargoes to the US East Coast in anticipation of delays on the west coast, whereport labor union talks are expected to start in May.
A source said the negotiations in the past have been rife with disputes that led to long delays in clearing shipments from ports.
"This time logistics are already stretched, and shippers don't want to take any chances," the source said, adding that they are now preferring to shift cargoes to East Coast North America.
Although there was a drop in basic freight, the premium on this route was stable.
"Most shippers in the sport market are paying the premium price to secure bookings because even though the carriers display lower FAK rates on their websites, there is no space at that price point," another source said.
Market participants expected premiums to increase in May once lockdowns in China are lifted and demand for containers from Far East Asia tightens equipment availability in Southeast Asia.
Container rates from Asia to Europe continued to slip, albeit gently, over the course of the week as demand continued to tail off, with the market waiting for news from Shanghai before booking more goods to leave the region.
"Rates are coming down because there just isn't demand, it's a simple as that," a European freight forwarder said. "Why pay for delays when you could just wait?"
As a result of the lockdowns, however, delays have started rising at other Chinese ports, including a larger vessel queue offshore Shanghai.
"People are starting to pick up their enquiry from SE Asia where they can," a third freight forwarder said. "There are a few other Chinese major ports that are seeing some form of spike in demand, if there is any way to move goods out of China, people are eyeing it up. Sadly as Shanghai is the largest port, no matter what people try and do, there simply isn't the capacity at other ports to export goods."
Platts Container Rate 1, from North Asia to the North Continent, fell a further $100 on the week to $12,000/FEU, the same level as in mid-June 2021 and the lowest rates recorded for over ten months. Meanwhile, PCR11, from North Asia to the UK, fell $150 over the same period to $13,100/FEU April 22.