- Asia-US freight likely at or near bottom, carriers eager to push through April increases
- Trans-Atlantic trajectory continues downtrend as market normalization progresses
- Strong volume forecasts to support South American export rates
North American box rates moved largely sideways during the week to March 17 as cargo owners continued to test pricing at or below carrier break-even levels. At the same time, continued volatility was registered in the North Asia-South America run as forward demand signals remained murky and carriers looked to implement rate increases.
The key North Asia-US West Coast run was assessed flat at $1,250/FEU over the course of the week, down just $25 from the start of the month.
“I would say it seems to have stabilized,” a European-based carrier said. “A number of carriers have filed and announced GRI’s for the month of April. At present moment, we do not see April being the appropriate month to implement GRI, given supply continue to exceed the demand.”
Indeed, carriers are keen to levy rate increases in April as many shippers have been heard waiting to see further spot rate developments before entering into term contracts in beginning in late March. As it stands, spot pricing is well below anticipated contract rates into the USWC, which are widely expected to settle between $1,700/FEU and $2,000/FEU.
Coastal differentials have also aligned with prepandemic norms, with USEC discharges sitting just $1,050/FEU higher than those to the USWC for ex-Asian cargoes.
Platts Container Rate 5 – North Asia-to-East Coast North America – ended the trading week at $2,300/FEU, down $150 since March 1.
“[Our ships have] 80-85% utilization average out of North Asia,” said another carrier source, noting that liners are going to continue to aggressively curtail capacity and lay up ships in a bid to meet falling demand.
Freight in the Atlantic basin held firm during the week, despite sentiment holding that rates will continue to ease as tonnage supply has largely balanced against cargo demand. While the TA run remains the most lucrative of the major east-west trades at the moment, the normalization process has begun and rates are primed to continue easing further.
In South America, where rates have experienced mild volatility throughout the first quarter, market sources anticipate an upswing in April/May as shippers look to reengage import orders.
Strong grains and soybean harvests are expected to increase demand for export rates, particularly on the ECSA-to-Asia run.
PCR32 – ECSA-to-North Asia -- came to $1,300/FEU on March 17, up $600 on the week.