Container spot rates on the Asia-Europe and transpacific tradelanes are on course to dip below pre-pandemic levels before the end of the year.
However, ocean carriers’ operating costs are significantly higher than they were in 2019, which could force more exposed lines back into the red in the first quarter of 2023.
According to Lars Jensen, CEO of Vespucci Maritime, given the extremely weak demand, the sharp decline in spot rates was “inevitable”.
But he added that after rates had bottomed out, there could be a bounce-back in demand, which would support a freight rate recovery.
Both Maersk and ONE reported material weakness in their liftings at third-quarter earnings calls this week, with Maersk down 7.6% and ONE down 9% in the period, compared with the previous year.
Meanwhile, the spot market indices are unable to keep pace with heavy discounting on exports from China. For example, Drewry’s WCI North Europe component declined by a relatively modest 4% this week, to $3,684 per 40ft, after falling by over a third since September.
However, The Loadstar’s forwarding contacts say they are seeing rate offers from China of $3,000 per 40ft, or less, for November shipment.
“I can’t believe anybody is moving their boxes under contracts at the moment,” said a UK-based NVOCC.
“We are receiving silly offers from Chinese forwarders almost daily, with those rates apparently valid with all the main carriers,” he added.
However, the decline of spot rates on the troubled Asia to US west coast tradelane appears to be showing signs of bottoming out, with Xeneta’s XSI reading flat on the week, at $2,087 per 40ft.
Container imports at the ports of Long Beach and Los Angeles are down substantially after the withdrawal of transpacific ad-hoc and newbie services, with the port of Los Angeles’ Signal data recording volumes 26% down this week, on the same week of last year, and showing 27% off for next week.
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However, for the US east coast, carriers have been able to keep a brake on the spot rate erosion, supported by the shift of extra volumes from the west coast and the effect of persistent port congestion.
Rates are still falling on the route, but not at the pace of the west coast, with today’s reading of the Freightos Baltic Exchange FBX component reversing the decline trend by putting on 16%, to $6,586 per 40ft.
However, the spike is likely to be caused by a blip in the data, but it still suggests the trade has resilience.
Elsewhere, the outlier for container trades remains the transatlantic, where carriers have so far managed to hold onto the substantial rate gains achieved in the past two years.
This week’s FBX North Europe to US east coast component edged up slightly, to $7,102 per 40ft, compared with a reading in the same week two years ago of just $1,800.
Despite the redeployment of more capacity to the tradelane, rates, for now anyway, are holding up.
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