Asia-Europe Spot Rates Fall 20% After Two-Week Upswing

Spot rates on Asia-Europe trades have fallen to $699 per TEU, a rate that is said to be 36 percent lower than during the same week in 2014.

Data from the Shanghai Containerised Freight Index (SCFI) shows that container freight spot rates on the Asia-Europe route have resumed a predictable slide due to weak demand and over-capacity, falling 20 percent last week, JOC reports.

Spot rates were said to have fallen to $699 per TEU at the week's end, 36 percent lower than during the same week in 2014, and 60 percent lower than during the first week of this year.

Spot rates on the Asia-Mediterranean trade lost $204 per TEU during the week, down 21.6 percent to $737 per TEU.

"With carriers unable to maintain the latest GRI during a period in which cargo demand is supposed to be firmer, carriers should be concerned for the remainder of the year and in particular the slack season during Q4," said Richard Ward, Derivatives Professional, Freight Investor Services (FIS).

"Rates year-to-date are in fact already 47 percent lower than the same period last year.

"With the exception of the westbound trans-Atlantic and Asia to Middle East trades, rarely have we seen so many major routes performing so poorly all at once."

SCFI data also showed that trans-Pacific spot rates were down 10 percent this week, with rates falling to $1,280 per FEU on the Shanghai-Los Angeles route.

Asia-U.S. East Coast rates reportedly fell by almost 5 percent to $2,812 per FEU.

"The order book is getting out of control with another 1.14 million TEUs added since January," said Drewry, commenting on an estimated 129 ships of 8,000 TEUs that are expected to be entering the market in the second half of 2015.

Alphaliner says that the number of idle container ships of over 500 TEUs has risen by 108 from 82 two weeks ago, and is a number that is expected to grow further.

"The traditional peak summer season has so far failed to provide a boost to vessel demand, as the weak cargo outlook is forcing carriers to cut back on their capacity deployment plans," said Ward.

In the previous week, container freight spot rates on east-west routes surged for a second week in a row, with Asia-Europe market rate reaching $879 per TEU, a 60 percent increase from the previous week.