While spot prices for containers on the Asia-Europe and Trans-Pacific trade routes appear to have hit rock bottom, the start date for many new long-term contracts remains uncertain. Shippers, BCOs and NVOCCs are shifting a higher percentage of their business to the spot market due to deadlocked contract negotiations and weak demand.
in fact, shipping companies are accumulating to encourage their contract customers to book cabins through spot prices, rather than handing over the goods to competitors and then going back for customers.
the latest issue of the Baltic Freight Index (FBX), the Asia to Northern Europe index was flat at an average of $1349 per 40 feet. It is clear that the shipping company is prepared to take all measures in terms of capacity management to prevent the freight rate on this route from falling below $1000. The FBX index from Asia to the US West also remained stable, with a freight rate of US $1006/FEU, while US East's freight rate was stable at US $2100/FEU after recording losses in previous weeks.
Trans-Pacific Shipping Company is stepping up the implementation of the "blank voyage" plan to reduce the impact of reduced demand and the pressure of further decline in freight rates. Recently, Maersk and MSC, partners of the 2M Alliance, announced on the 31st that they would cancel TP6/Pearl and TP2/Jaguar voyages from China on April 13 and 21 respectively.
TP6/Pearl and TP2/Jaguar
TP2 Route
TP6 route
in fact, the route cargo volume is sluggish, the future prospects are confused, and the cancellation strategy adopted by shipping companies to alleviate the impact of extremely weak demand and curb the decline in spot container freight rates has obviously not been effective. On February 13, Maersk announced that it was suspending the trans-Pacific TP20 pendulum route until further notice due to a decision to take steps to balance the service network in anticipation of reduced global demand. In mid-March, the 2M Alliance announced the permanent cessation of operations of the AE1/Shogun Loop, one of its six Asia-Europe routes.
Meanwhile, Xeneta's long-term freight rate analysis for March showed the freight benchmark's index fell just 0.5 percent in its crowdsourced data, after falling 1/4 since last August.
Patrik Berglund, chief executive of Xeneta, explained that this did not mean a rebound in the liner market, but rather a lack of new contract data from shipper customers. He explained: "The main reason for the relatively small decline is the lack of new effective contracts, rather than the strengthening of fundamentals. The main bidding season in Europe has passed, while the bidding season in the US line market is coming soon. The prospects for shipping companies to maintain their current long-term contract rates look slim, to say the least.
Berglund said it expects new contract rates to fall "significantly" in the coming months, which in turn will pull down the XSI index significantly. He added: "Barring a major event, I think the long-term contract in the second half of the year will be very different from the one in force at the beginning of 2023."
on other routes, spot container freight rates on transatlantic routes continued to fall week-on-week, with Xeneta's XSI Nordic to Eastern Index showing freight rates falling again by 8% to $3975/FEU in the past seven days.
in addition, according to a North Atlantic shipping company trading manager, in fact the market price has fallen below $3000. The manager said: "Freight prices are expected to fall back to $2000 per case by June."
source: Ningbo Shipping