Shippers see market at its peak after rate freeze announcement

All-inclusive rates from Asia to North America were supported this week by worsening US port congestion and equipment imbalances, but there were growing expectations that the market was approaching its peak as some shipping lines pulled back from further rate increases.

The reemergence of some US inland point intermodal offers from shipowners was one source of relief. Rates including premium service fees from North Asia to West Coast North America and then on to Chicago by rail were offered at around $22,000/FEU, down from more than $30,000/FEU when IPI bookings were last offered several weeks ago, a US-based freight forwarder said.

“It doesn’t mean there are a lot of IPI offers, but there are more than there were in August,” the freight forwarder said. “The steamship lines are pressuring the railroads to provide more space out of concern they are losing clients in the Midwest.”

On a port-to-port basis, premium rates from China to North America were offered by one major shipping line this week at $17,100/FEU to the Pacific Coast and $19,300/FEU to the Atlantic and Gulf coasts.

European shipping lines CMA CGM and Hapag-Lloyd announced Sept. 10 that they would cap spot market rates at their current levels, the former until Feb. 1, 2002, and the latter for an indefinite period. While there was little confidence that other major shipowners declare a similar rate freeze, there were growing expectations that diminished reliability by the shipping lines during the peak holiday restocking season would limit further rate increases.

“The carriers have said they won’t increase rates any further, but we should keep in mind that they already announced GRIs for October, even before the rate freeze announcement came in,” a US-based analyst said.

Congestion at major US ports continued to exasperate shippers trying to support their retail sales targets. The queue of vessels waiting to berth at the Los Angeles/Long Beach port complex shattered records from years past at more than 60 ships this week, while most other US ports had ships in queue as well, including a line-up of 21 ships waiting off the coast of Savannah on Sept. 16, according to Platts cFlow trade-flow analytics software.

COVID-19 outbreak hits China’s Xiamen

Premium rates for container shipments for Southeast Asia to North America remained largely unchanged during the week ended Sept. 17. Market participants said rates were already near the peak and any further increases could attract pushback from shippers.

The all-inclusive premium rate for Southeast Asia to East Coast North America East Coast was heard at $19,000-$25,000/FEU, although some shippers were paying as high as $30,000/FEU for exceptionally prompt loading.

“While the rates for East Coast ranges from $19,000 per FEU to $25,000 per FEU, in some cases we have seen rates severely high above $25,000, depending on the availability and the urgency,” a US-based freight forwarder said.

For Southeast Asia to West Coast North America West Coast, premium rates were heard in the $16,000-$20,000/FEU range.

Besides high rates, shippers are keeping a close eye on the emergence of COVID-19 infections in the Chinese port city of Xiamen, which has obstructed trucking activity and could also hinder port operations if not controlled in time.

“The city has been under a lockdown and there have been some issues with trucking,” a South China based freight-forwarder said. “The government is actively trying to control infections, but if it escalates there could be a big problem for the container shipments as Xiamen is one of the major ports in the world.”

Asia-to-Europe rates have limited upside

Container rates to Europe continued to be done almost exclusively on FAK basis, and as with other major trade lanes, the news that some carriers may not further increase rates was seen as a blessing for many market participants.

“At least prices won’t go any higher I guess,” a freight forwarder said. “Unlike the other lanes, we [Asia to Europe] are doing it all FAK so any restriction in further bullish movements will see us benefit more than anyone else.”

Despite this positive outlook, others in the market have had significant reservations.

“One of the carriers has said they aren’t moving their prices until Q1 next year, but what if demand slumps and everyone else comes down? This is a carefully worded double-edged sword,” another freight forwarder said.

Platts Container Rate 1 – North Asia to North Continent – was assessed unchanged this week at $17,500/FEU.

Source: Hellenic Shipping News

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