Spot rates ex-China are expected to reach five figures – high street prices will rise, The Loadstar warns

There were further double-digit increases in spot freight rates for containers this week, after a series of across-the-board rate increases and other surcharges came into effect on June 1, a day or two after last week’s indices were published.

Drewry’s World Container Index (WCI) posted week-on-week gains of 14%, 17% and 11% on the Shanghai-Rotterdam, Shanghai-Genoa and Shanghai-Los Angeles routes respectively.

The rate for the Asia-North Europe route was $6,032 per 40ft, while Xeneta’s spot rate XSI index for the same route rose 18.5% to $5,647 per 40ft.

The spot price on the WCI Shanghai-Genoa route was $6,664 per 40ft.

WCI’s Shanghai-Los Angeles route was $5,975 per 40ft, while the Shanghai-New York spot rate grew 6% to $7,214 per 40ft.

The XSI’s transpacific route recorded growth of 19.5%, to $5,859 per 40ft.

“Drewry expects freight rates outside China to continue to rise next week, reflecting the start of the early peak season,” the analyst said.

And European freight forwarders are warning that spot rates from Asia could cross the five-figure mark next month. One told The Loadstar: “As expected, spot rates will exceed $10,000 per 40ft from July 1, and several airlines’ online pricing platforms are already reflecting this.”

According to a report from the BBC This week, the increase in spot interest rates will start to affect retail prices on the shopping streets, causing them to rise.

Whether spot interest rates remain at this high level will most likely depend on how long demand lasts.

“If the surge in demand marks the early start of the peak season, we can expect demand-side pressures to ease within a few months, and sooner than normal,” said Judah Levine, Freightos’ principal analyst.

“Just as rates rose due to a combination of pre-Lunar New Year demand and limited capacity in the early months of the diversions, and fell once demand waned, prices and disruptions should fall when the peak season slows down this time too, although until the Red Sea When traffic returns, we can expect interest rates not to fall lower than April levels,” he added.

In contrast to the ex-Asia routes, the spot rate of the Rotterdam-New York transatlantic headhaul fell 4% week on week on the WCI to end the week at $2,136 per 40ft.

Meanwhile, the growing shortage of equipment in Asia’s export hubs has led to a bubble in container prices, according to box trading platform Container xChange.

It said average container prices for 40ft high-cube units at key Chinese ports rose 45% last month, to $3,250 from $2,240 in April. Prices for comparable units were around $1,698 in November, but $7,178 in September 2021, at the height of the Covid boom.

Container xChange founder and CEO Christian Roeloffs said the causes of the higher container prices were the same as those that had caused the recent increase in spot freight rates, adding that they could fall just as quickly.

“While we are closely monitoring the market, it is clear that the current spike in container prices is not sustainable in the long term as it is not supported by strong underlying demand.

“Concerns about labor markets and high interest rates imply that consumers are likely to cut back on spending, which could lead to a decline in demand for goods and therefore a decline in shipping volumes in the short term – unless the revival of demand becomes stronger and the absorption of supply capacity increases.

“As the initial rush to replenish inventories subsides and real consumer and business demand remains flat, we expect container prices to stabilize or even decline in the medium term; the market is showing signs of volatility, driven by short-term factors, rather than a sustained increase in demand,” he added.