New York February 7 2022: All-inclusive container rates out of Asian production hubs held their balance at a significant discount to previous highs seen in the December and January loading period as demand for cargo faltered on limited production capacity during the Lunar New Year holiday period.
"Premiums skyrocketed before Lunar New Year, now have decreased a bit," a US-based freight forwarder said. "March is typically the trough [and] slowest of the year."
During the week, S&P Global Platts heard all-inclusive premium bookings into the USWC at $12,000/FEU. Offers into the US Atlantic Coast were at the $13,000/FEU and above level, for post-Lunar New Year sailings.
Platts Container Rate 13 – North Asia-to-West Coast North America – was assessed Feb. 3 at $9,500/FEU, flat on the week. While premium service rates tend to increase the total freight cost by $2,000 to $3,000 on average, some sources have reported an easier time securing space on an FAK basis, a rarity in recent months as shippers have vied with one another to secure bookings, propping all-in rates up.
"Spot rates from main China base ports have dropped during the Lunar New Year," another freight forwarder said. "Everyone I spoke to in Asia believes orders will be strong enough in March to bring rates back up."
Southeast Asia to USWC all-in rates slide
As the struggle to procure equipment and book a confirmed space on the vessel continues, premium rates still rule the market and stand at nearly double of the FAK (Freight All Kind) on the Southeast Asia to North America trade lane, sources said.
The all-inclusive premium rates on the Southeast Asia to East Coast North America trade route was heard at $17,000-$19,000/FEU, slightly lower than the upper cap of $20,000 a week ago. For the USWC, the rates fell to $13,000-$16,000/FEU, against $15,000-$17,000/FEU the week before.
"Shippers are avoiding making bookings to the West Coast due to long queues there, instead they are placing bookings to the East Coast and getting the inland transportation from there," the Singapore-based source said.
This has led to a decline in the rates to the West Coast and many co-loaders are actively offering bookings at cheaper prices, but they don't attract too many customers due to unreliable services, the source added.
The FAK rates on the route registered decline during the week ended Feb. 4 due to tepid trade on account of the Lunar holiday, sources said.
Platts Container Rate 25--Southeast Asia-to-East Coast North America—was assessed at $10,500/FEU and PCR23--Southeast Asia-to-West Coast North America—was assessed at $9,500/FEU, both down $500/FEU from a week ago.
"The rates might have eased slightly but this is just a temporary relief and the demand will pick up again," a source based in Singapore said.
The endless congestion at the US and UK ports will further continue to spur the rates, however they seem to be stabilizing now, the source added.
The turnaround time has slightly improved and the customers are planning better but blank sailings and backlog after the February holiday may keep causing troubles for the container sector, sources said.
Meanwhile, vessel space for Southeast Asia-Australia remain scarce as carriers are reluctant to deploy vessels on that route, sources said.
The all-inclusive premium rates from China and Vietnam to Australia is currently at around $8,000-$9,000/FEU, as compared with $6,000-7,000/FEU a month ago, sources said.
"The reluctance is also due to the nature of trade between the two regions. Most of the goods shipped are heavy machinery or raw materials and carriers tend to avoid those in the current scenario. The volumes on the back-haul are also low, further deterring shipping lines from capacity deployment," a cargo owner active on Asia-Australia trade lane said.
Asia-Europe trade softens further
It was the backhauls from Europe to Asia that saw some movement over the course of the week, with rates coming down on the expectation that the Lunar New Year lull will give carriers some chance to rebalance their schedules.
PCR2 North Continent-to-North Asia was assessed at $1,400/FEU, down $200/FEU on the week, and front haul rates along this route also saw a slight downside as expected owing to the Lunar New Year holidays.
With exporting demand expected to begin to ramp up again after the holidays, many market participants are keen to secure space for the Asia Westbound trade lane, with rumors that premiums will begin to be added to the market, however these are yet unsubstantiated. The Asia-to-Europe market still remains done on a FAK basis, with PCR1 – North Asia-to-North Continent – assessed at $14,500/FEU on Feb. 2, down $250.