Latest indices show a further weakening in the spot market, with indications pointing to further rate misery for Asia-Europe carriers. Average third quarter rates were down markedly on 2018 levels, while the transpacific trade too continues to offer little respite.
Platts report spot rates from North Asia to Northern Europe lost ground by a further $200 last week.
THE Asia-Europe spot market continues to offer little joy for carriers, as oversupply and weak demand combine to put increasing downward pressure on rates.
Analyst Platts noted the “bearish sentiment” that dominated the market over the course of the past week, prompting a further erosion in rates on headhaul westbound services.
Spot rates from North Asia to Northern Europe on Platts rate index slipped to as low as $975 per feu come Friday (September 27), down $200 on the prior week.
Meanwhile, the Drewry assessed World Container Index dropped back 16% on the Shanghai-Rotterdam route to $1,228 per laden 40 ft box.
“This comes on the back of a strong oversupply in the market, highlighted by the flurry of void sailings in place for October, coupled with significantly waning demand in the market as a result of Chinese Golden Week at the start of the month,” Platts said in its weekly commentary.
Nevertheless, a carrier source told Platts that spot levels were still being pushed down throughout September, which is typically a “busy month”.
“Last year was also quite quiet. Rates were dropping, and we expect to see this into the fourth quarter — we are not seeing stronger rates,” the source added.
Platts said that utilisation levels are currently hovering in the low 90 percentiles.
Transpacific spot rates also lost ground this week, although carriers managed to hold rates slightly firmer.
Platts reported spot rates dropping back by about $100 on the North Asia-North America west coast route to $1,250 per feu.
With the third quarter drawing to a close, and with it the peak season, the bad news for carriers is that spot rates on either east-west trade performed markedly worse than in 2018.
Average spot rates on the Shanghai Containerised Freight Index on services to northern Europe and the Mediterranean out of Shanghai were down 17.7% and 6% respectively, while on the transpacific trade rates to the US east coast averaged $2,649 and US west coast $1,501 per feu, down 14.8% and 25.7%, respectively.
And with the market fundamentals distinctly out of kilter a strong end to 2019 looks unlikely.
Entering the fourth quarter, however, Platts said that the market is braced for further upheaval with clarity still lacking ahead of the 2020 sulphur cap.
One US-based shipper said that while some carriers are switching to low-sulphur blends from October 1, others will from the start of November and other lines from the midpoint of the quarter.
“There really is not much clarity in the market at this point,” the shipper told Platts.
It promises to be another challenging three months for carriers.