Transpac rates hit US Dollar 17k as Ever Given effect plays out
Even given container ship
Transpacific rates are once again flying high with eastbound volumes hitting the stratosphere with a US$17,000/FEU rate hitting the top rate for this week.
Rates on the Pacific will be affected by the six days of delays at the Suez Canal caused by the grounding of the Ever Given. The effects of the Suez incident have yet to be felt in the pocket, the effects on the wider supply chain are predictable.
Maersk Line reports that most of the blocked ships caused by the grounding of the Ever Given in the Suez Canal have now transited the waterway and resumed their journeys, but with ships now schedules out of synch there are expectations of equipment shortages and cargo delays.
Returning vessels to their schedules could take some weeks and with delays in returning empty boxes already a part of the problem further delays are likely to see Asian exporters struggle and spot rates rise.
Alan Murphy, CEO at Sea-Intelligence, says that the Asia to Europe trades will see a fall in available capacity followed by a spike as ships arrive back in Asia, "Then there is a series of what can best be described as 'reducing waves' as the ripple effects of the impact slowly evaporate," he added.
“Expect the Suez Canal closure to produce a ripple effect impacting bookings from Asia,” said consultant Jon Monroe, who added that Maersk “expects a 30% capacity reduction in the coming weeks as vessels backed up in the canal are delayed getting back to Asia. Given that most vessels plying the Asia to Europe trade are the larger vessels (18,000 TEU to 24,000 TEU) the number of empties delayed will be considerable.”
The Freightos Baltic Index (FBX) has yet to register this increase in the Asia to Europe trades, but on the Pacific there has been considerable rate movement in the days before the Easter Break with US West Coast freight rates boosted by around US$600, from US$4,534/FEU on 23 March to US$5,151/FEU by the 26 March. Since the 26 March spot rates have slipped a little to US$5,089/FEU on 5 April, but with US stimulus cheques arriving in the post, consumer demand is expected to hold up for the foreseeable future.
Shippers are now finalising annual contracts and the major concerns for this year have been space, rather than price.
As a consequence, “Everyone, it seems, wants to increase their MQCs [minimum quantity commitment],” said Monroe. Some companies are experiencing growth others are not seeing the same levels of demand, “But most are going to the carriers to try to lock in as much of a commitment as they can for the 2021-2022 contract year and then contract with an NVOCC for the volume the carriers will not take,” explains Monroe.
That means that shippers are likely to rely more on NVOCC’s as space tightens, and with the carriers already booked up to the end of April, the forwarding community will be looking at another bumper year.
“In 2019 NVOCCs accounted for 44% of the Transpacific Eastbound container traffic market share. By the end of 2020 it was close to 47%. The first three months of 2021 saw the NVOCC market share rise above 52%,” and that trend is expected to continue according to Monroe.
Even though the full effects of the Suez closure are yet to be felt Evergreen’s pricing for a 40ft box out of Yantian to the US East Coast can be seen as a barometer for changes in the pipeline. “You can book a container on the Ever Fit for this price [US$17,000/FEU] departing Yantian on 15 April. Unfortunately, that is only two weeks away so you will need to click on join wait list,” said Monroe.
Meanwhile, Asian ports are already beginning to report container shortages as the situation in the US with intermodal and inland containers has worsened, with Monroe suggesting the internal US supply chain is “broken”.
Source : https://container-news.com/transpac-rates-hit-us17k-as-ever-given-effect-plays-out/