Shipping lines could be forced to halt further eastbound US West Coast trans-pacific loops and the vessels they operate to stop the extraordinary bleeding of container spot rates that have halved in value over the past four weeks.
Today’s reading of the China-U.S. West Coast component of the Freightos Baltic Index (FBX) shows spot prices for 40-foot machines are down 20% this week compared to a typical premium rate of $20,000 a year ago. to $2,361. It has decreased by two-thirds since May.
Despite aggressive declines by carriers, ships are reportedly barely filling three-quarters of Asia bound for the US West Coast, with spot rates set to top $2,000 next week.
And unless carriers radically reduce capacity on their routes, fares could fall below pre-pandemic levels before the start of the contract season, severely damaging the bargaining power of routes.
Additionally, his BCO, which has about four times as many contracts as the spot market, is said to receive a “temporary” discount from carriers in the meantime to maintain loyalty. Xeneta Chief Analyst Peter Sand described the drop in trade lanes as “dramatic”.
“This is a really amazing development,” he said. “Shippers who have long turned their backs on the wall in negotiations are seeing the market turn around much faster than many expected. Forty feet he can move three containers.”
Meanwhile, the erosion of spot rates between China and Europe has also continued at a rapid pace, with Drewry’s Northern Europe WCI reading down 13%.
Spot rates to the Nordics remain 50% higher than they were in October 2020, despite a drop in value of around 70% over the past year. But a spokesperson for the UK-based carrier told Roadster this week that the outlook for bookings from Asia to northern Europe is “gloomy” in the coming weeks.
“Other than when the pandemic started, I can’t remember a time when markets have changed so quickly and seemed to get worse before recovering,” he said.
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