Container lines have their backs against the wall as they rally behind sharp general rate increases (GRI) for the Far East and Europe trade later this week.
Following three unsuccessful attempts over the past months, carriers will be pushing for hikes of between USD730 and USD1,300 teu on spot freights ex-Shanghai to Europe’s north range ports as per 1 May.
The Shanghai Containerised Freight Index average spot rate for the route was down by 12.5% to just USD349 teu on 24 April as container lines struggle to fill their ships amid reduced cargo growth.
The core freight rate adjusted for bunker costs – as reflected by average bunker surcharges of around USD300 teu – is still positive, unlike during previous freight slumps in 2011 and 2013, Danish market research firm SeaIntel explained.
However, the margins are far too low to cover operating and capital costs of the ships and container equipment.
“The question is how severe the pain must be before all carriers stand firm on the increase,” SeaIntel said. “Next week will tell if we are there yet.”