S&P Global Offerings
Featured Topics
Featured Products
Events
S&P Global Offerings
Featured Topics
Featured Products
Events
S&P Global Offerings
Featured Topics
Featured Products
Events
S&P Global Offerings
Featured Topics
Featured Products
Events
Solutions
Capabilities
Delivery Platforms
Our Methodology
Methodology & Participation
Reference Tools
Featured Events
S&P Global
S&P Global Offerings
S&P Global
Research & Insights
Solutions
Capabilities
Delivery Platforms
Our Methodology
Methodology & Participation
Reference Tools
Featured Events
S&P Global
S&P Global Offerings
S&P Global
Research & Insights
06 May 2022 | 16:28 UTC
Highlights
Market braces for Shanghai reopening
Reliability, space availability improves on weak demand
Weak demand for ex-Asian cargoes prompted shipowners to keep premium market rates flat during the week ended May 6 while the market looks to eventual reopening in China with expectations of quickly rebounding volumes and freight rates.
"Premiums are certainly lower, maybe not eliminated but they're applying to less of the cargo and at lower levels... China might be mostly all FAK," a freight forwarder said.
As partial reopening continued in and around Shanghai during the week, and sources expect volumes to grow in the coming weeks from current lows.
Additionally, bookings through alternative ports such as Ningbo and Qingdao were reported at a slight premium to those transiting Shanghai as droves of shippers reroute their cargos to nearby ports.
During the week to May 6, S&P Global Commodity Insights heard a higher proportion of bookings done on an FAK basis, while base port premium indications remained scant. However, sources maintain that priority equipment, loading, and transit fees can command a $1,000-$3,000 premium over FAK base rates.
"Things in Shanghai are looking pretty bad," a carrier source said. "Lots of cancelled bookings due to trucking constrictions. It's difficult to switch overnight and say there will be more cargo coming out of a different port."
All-inclusive premium rates on the Southeast Asia-North America route remained rangebound during the week ended May 6, with increased capacity in the region keeping the premium rates stable at lower levels.
During the week, S&P Global Commodity Insights heard all-in booking rates from Thailand to East Coast North America in the $14,000-$14,500/FEU range, and $12,500-$13,000/FEU to Long Beach on the West Coast of North America. However, when shipping to Oakland -- also on the west coast -- the booking rates were heard as high as $14,000/FEU, bringing the spread between the all-inclusive rates to the two coasts to nearly zero.
"It has become a lot easier than before to find space on vessels recently, and the rates are not as high as before," a source based in Thailand said.
"The market has flipped, perhaps temporarily, because the carrier agents who were not picking our calls until a few months ago have now started calling us and offering space on vessels at reduced slot levels," a market participant said. "I'm getting calls from my team members in China informing me that X carrier is offering 100 containers, while Y has called and offered more with prompt loading."
From Singapore, a key transshipment port in the region, all-inclusive spot rates were heard in the $12,000-$12,500/FEU range for ECNA, and $9,500-$10,000 per FEU to WCNA.
While increased capacity has resulted in lower all-inclusive rates, the industry is now bracing for the impact that reopening of key hubs in China -- especially Shanghai -- is going to have on the global ocean freight segment, the source said.
"Shanghai is slowly opening up again and step by step they'll ramp up their operations to reach full capacity soon enough," a source based in Indonesia said.
It remains to be seen how and when the market will react to Shanghai being fully operational -- after a considerably long shut down -- clearing and meeting all the backlog and new demand, sources said.
Container rates from Asia to Europe continued their gentle decline over the course of the week, with much of the market still in their now long-established wait-and-see positions given the ongoing lockdowns in Shanghai.
Despite this short-term bearish picture, further out there appears to be more demand as many expect the lockdowns to ease into the middle of the month, prompting fresh demand at that point.
Given the tonnage that is currently tied up offshore China, and the delays that are creeping in at other ports in the area, this appears for many market participants to be an issue that will continue to stretch supply chains for some time now. The volume of pent-up demand to move from the world's largest container port will likely result in equipment imbalances across the region and in Europe for some time, sources told S&P Global Commodity Insights.
Platts Container Rate 1 -- North Asia-to-North Continent -- was assessed at $11,150/FEU on May 6, down $250 on the week.