Spot rate decline slows, but prices for some long-term ocean contracts soar

Spot container freight rates on the main east-west trades continued to fall this week, although the trajectory of the decline has begun to flatten, with the drops all in single digits.

The largest decline was seen on the Asia-North Europe trade: yesterday’s weekly World Container Index from Drewry saw its Shanghai-Rotterdam leg slump 9% week on week, to $4,682 per 40ft, although it still remains nearly 300% up on the same point last year, when rates were in freefall and carriers booked a quarter of losses.

The Xeneta XSI reading for Asia-Europe short-term rates this week stood at $5,424 per 40ft, a drop of 15% on the week before.

However, despite the decline in spot rates over the past couple of months, a different trend appears to be under way in the long-term contact rate market, according to new research by Xeneta’s shipping analyst, Emily Stausboll.

Between 1 July and 18 September, the XSI’s Far East to North Europe trade saw the average short-term rate decline 29%, from $8,130 per 40ft to $5,755.

However, some lanes completely bucked this when it came to long-term contract rates – the average long-term rate recorded by Xeneta on the Vietnam-Rotterdam trade has not been far from doubling, from around $2,000 per 40ft in July to just topping $3,600  today.

However, last December the average long-term Vietnam-Rotterdam rates stood at around $1,300 per 40ft, indicating considerably more volatility than is commonly attributed to the long-term market.

“If you are a shipper who imports goods from Vietnam to Rotterdam, you would probably disagree with the suggestion that the long-term market has remained relatively flat throughout 2024 before beginning to rise in July.

“In fact, the long-term contract market on this trade saw its first significant increase back in January, with further increases at the start of February and April. Then, following a subsequent softening of rates during Q2, the market has been increasing since the start of July,” she said.

Meanwhile, the WCI’s Shanghai-Genoa route was down 6% on last week and finished this week at $4,928 per 40ft.

The WCI’s transpacific Shanghai-Los Angeles was virtually static, with a 1% decline to $5,580 per 40ft, while the XSI Far East-US west coast was down 3%, to $6,137 per 40ft, and the WCI’s Shanghai-New York leg dropped 4%, to $6,364 per 40ft – although shippers paying these prices and loading cargo this week could see their cargo held up at ports on the US east coast, should the ILA go on strike, as it threatens.

For European exporters on the transatlantic trade to North America, this week was the last opportunity to ship cargo that would be unloaded before the ILA’s 1 October deadline, and spot rates remained firm – growing 2% on the WCI’s Rotterdam-New York leg to $2,056 per 40ft, and up 3.5% on the XSI’s transatlantic trade, to $2,318 per 40ft.

South of the main North Europe-North America transatlantic trade, Xeneta also noted this week that rates had collapsed on the North Europe-South America east coast trade to an all-time low, to such an extent that there is little spread between contract and spot rates.

“The long- and short-term rates on this trade plummeted to historic lows of $535 per 40ft and $610 per 40ft, respectively,” Ms Stausboll noted.