As container spot rates continue to plunge the gulf with long-term contract levels gets ever wider.
Marcus Hand | Dec 09, 2022
The Asia – Europe trade continued to lead the downwards trajectory with Drewry reporting that Shanghai to Rotterdam spot rates lost another 14% this week to sit at just $1,686 per feu on Thursday.
Drewry’s World Container Index (WCI) dropped a further 6% to sit at $2,139 per feu and is now 79% below the peak of $10,377 reached in September 2021.
Related: Container lines facing difficult contract negotiations
The Shanghai Containerized Freight Index (SCFI) saw a slower rate of decline of 2.84% to sit at 1,138 points.
The dramatic plunge in spot rates has seen long-term rates previously at a discount now being at a huge premium.
Related: Container spot rate decline accelerates again in past week
Xeneta noted that spot rates on Asia – Europe had gone from a position of a $5,640 per feu premium on 1 January 2022, to sit at $4,460 below long-term rates on 1 December.
On the Asia – US East Coast trade long-term rates have actually gone up 11% since the start of the year despite the sharp fall-off in spot rates.
“The difference between short- and long-term agreements here is unprecedented,” Peter Sand, Chief Analyst for Xeneta, explained. “This is currently the largest divide, with long-term rates now $5,030 per feu more expensive than spot rates. That’s a 237% premium. If you go back to January, the shoe was on the other foot, with the spot rates sitting $4,900 per feu higher.”
Sand added: “This is one of only two of the major trades out of the Far East, together with the South American East Coast route, where new long-term rates are less than double the average spot rate in early December. This is a stark indication to shippers of exactly where the value lies in the market as we head into the New Year. The short game, it seems, is the one to play right now.”
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Reference: https://www.seatrade-maritime.com/containers/spot-and-long-term-container-rate-gulf-continues-widen