Container spot rates from Asia to the U.S. and Europe rose this week ahead of planned August general rate increase (GRI) and freight all kinds (FAK) rate increases.
The increase was most notable on transpacific routes, with the Shanghai Containerized Freight Index for rising 37.6% for the West Coast to $1,687 per 40-foot equivalent unit (FEU) and 20.2% for the East Coast to $2,685 per FEU.
The SCFI recorded freight rates for north Europe up 4.8% for the week to $963 per TEU and 3.6% for the Mediterranean to $883 per TEU.
The World Container Index assessed by Drewry, a composite of container freight rates on eight major routes to and from the U.S., Europe and Asia, was down 1 percent to $1,406.54 per FEU for the week ended July 27, but was up 19 percent from the same period in 2016.
The average composite index of the WCI, assessed by Drewry for year-to-date, came in at $1,542 per FEU, or $120 lower than the five-year average of $1,662 per FEU, but 19 percent higher than a year ago.
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Ahead of the GRIs that kick in Tuesday, the pace of rate erosion reduced on Asia-Europe and Transpacific trades this week. Rates on the Shanghai-Rotterdam route lost $20 to $1,685 per FEU, while rates from Shanghai to New York slipped $23 to reach $2,179 per FEU and those from Shanghai to Los Angeles lost $24 to $1,218 per FEU. The GRIs are expected to lift rates to the U.S. and Europe next week.
All this should help profitability for beleaguered ocean freight carriers that have suffered through years of depressed rates, leading to mass consolidation, the building of megaships to improve efficiency and even the bankruptcy of Hanjin Shipping last year.
Maersk Line, the world’s largest container shipping company, in May reported a loss of $66 million compared to a profit of $37 million in the prior-year quarter.
Also reporting its first quarter financials in May, the APL shipping unit of CMA CGM said for the first time since 2011, the division saw a return to profitability, with gross operating income of $56 million and net profit of $26 million.
Drewry director Philip Damas said on a webinar last week that he expected the industry to end the year in the black, cumulatively achieving around $5 billion in profit.
This expected improved industry profitability seems to be supported by OOCL’s operating results for first half. OOCL said last week that it carried 6.8% more containers on its ships than in the same period of 2016, as revenue improved 15.2% to $2.6 billion.