Spot market rates from Asia to North Europe and the Mediterranean continued their upward trend into December, fueled by ocean carrier rate hikes on Dec. 1 and robust demand ahead of an early Lunar New Year starting Jan. 29.
According to Drewry, rates from Shanghai to Rotterdam surged 19% week-over-week to $4,775 per FEU, while Shanghai-Genoa rates jumped 22% to $5,496 per FEU. Data from Platts, an S&P Global affiliate, showed slightly higher rates, with Asia-North Europe at $5,133 per FEU and Asia-Mediterranean at $5,400 per FEU as of Wednesday.
Hapag-Lloyd CEO Rolf Habben Jansen noted that demand for Asian exports remains strong, driven by early Lunar New Year preparations and shifts in trading patterns, including the U.S. presidency transition. However, extended voyage times due to rerouting around the Cape of Good Hope are straining carrier capacity.
“We’ve seen an 11% fleet growth this year, but TEU miles have increased by 18%, underscoring the challenges carriers face in meeting demand,” Habben Jansen explained.
The longer voyages are also affecting retailers like Guess. Dennis Secor, the interim CFO, highlighted that the company has accelerated shipments from suppliers to ensure timely delivery, with most inventory already in transit to warehouses by the third quarter.
Ocean carriers have leveraged the high demand to bolster rates and improve their bargaining position in annual contract negotiations. However, rate increases announced on Dec. 1 fell short of the $6,000 per FEU some carriers sought.
Markus Panhauser, CEO for Germany and Switzerland at DHL Global Forwarding, reported strong cargo bookings through November and December. “Space constraints are exacerbated by blank sailings, but the primary driver remains high booking volumes across all sectors,” Panhauser said. He anticipates further rate increases in January.
An Asia-based European shipper suggested that rates might decline post-January as weaker European economies curb demand. “Shipping lines are trying to sustain rates through blank sailings, but I expect a significant drop after the Lunar New Year,” the shipper said.
Carriers have reduced blank sailings for Asia-North Europe, with 86,952 TEUs cut in December (8% of capacity) and 65,630 TEUs in January (5.7% of capacity), according to eeSea. While these reductions are less severe than the 16% capacity cut in November, actual capacity on the route is set to increase by nearly 25% in January to over 1 million TEUs.
On Asia-Mediterranean trades, capacity is expected to grow 30% to 776,307 TEUs in January, despite blank sailings accounting for 8.3% of December capacity and 12.6% in January.
This complex mix of strong demand, rate increases, and capacity adjustments underscores the dynamic nature of the Asia-Europe shipping market as it navigates peak season and economic uncertainties.
Source: www.joc.com