spot rates from Asia to northern Europe fell this week to their lowest level before the COVID-19 began in 2020, with carriers unable to fill deployed capacity on trade routes as European importers bear the burden of inflation and high inventories.
de-stocking efforts in Europe and North America are reversing as companies hoard safety stocks, according to the GEP Global Supply Chain Volatility Index, partly due to the resurgence of COVID-19 infections in China and heightened concerns about future supply and pricing.
due to the abundant container transportation capacity, high inventory level and weak demand in the market, shippers and their service providers have little incentive to sign fixed-rate contracts with Asian and European carriers.
"Third-party logistics providers are obviously also taking a tough stance with carriers because of the delay in signing a new agreement," he added. "The carrier is clearly keen to cooperate with high-volume shippers capable of delivering stable and predictable cargo volumes.
Xeneta this week set the Asia-Europe spot price at US $1,995 per FEU, down 86% year-on-year and unchanged from 2020 1, 30. Drewry's Asian-Nordic price this week was US $1,741 per FEU, which is US $340 lower than the price in the same week in 2020.
Long-term interest rates in Asia-Northern Europe also fell sharply in April, as contracts signed at high interest rates last year were coming to an end. According to Xeneta, the average long-term interest rate on December 31 was US $4,193 per TEU, and as of the last day of January, it had dropped to US $1,745 per TEU on Tuesday.
to curb the decline in rate levels, airlines plan to cancel 27% of all Asian-European flights in the first seven weeks of this year. According to the Alphaliner, the three major airline groups 2M Alliance, THE Alliance and Ocean Alliance will cut 53 flights from 197 scheduled flights on the Asia-Northern Europe and Asia-Mediterranean routes by February 17.
Xeneta CEO Patrick Berglund pointed out in this week's market update that airlines have managed to protect long-term rates from the worst effects of last year, but that is now changing.
"With the coming of 2023, many of the contracts negotiated last year have expired," Berglund said. "Shippers are well aware that market dynamics are in their favor and have reacted to push carriers to significantly reduce rates. What we're seeing now is the impact of the new contract coming into force.
Forwardernet.com