Asia-Europe Box Rates Surge

Asia-Europe market rate has risen to $879 per 20-foot container, a 60 percent increase from the previous week.

Data from the Shanghai Containerised Freight Index (SCFI) shows that container freight spot rates on east-west routes have surged for a second week in a row, with Asia-Europe market rate reaching $879 per 20-foot container, a 60 percent increase from the previous week, JOC reports.

Two weeks of more than $300 per container increases has brought the spot rate above an originally estimated $800 per TEU.

The $879 rate for Asia-Europe is the highest prices have been since February 27, while similar gains were seen on the Asia-Mediterranean rates as rates hit $941 per TEU, an almost 40 percent increase from the previous week.

The turnaround comes in sharp contrast to plummeting rates in June that saw carriers loosing around $100 per TEU.

The news comes alongside reported widespread sailing withdrawals, with carriers said to have cancelled more than 50 voyages during the first half of 2015, roughly 10 percent of all Asia-North Europe sailings, and the highest rate of sailing cancellations ever recorded on the trade, according to Alphaliner.

Reports suggest that the recent rate rises will be hard to sustain, as while the weekly capacity on Asia-North Europe is expected to remain above 250,000 TEU in July, demand is expected to remain weak through the peak season.

Some carriers have downplayed the importance of the Asia-Europe spot rate, noting that about 50 percent of all containers on the trade are moved under annual contracts, 25 percent on quarterly or six-month contracts, while the rest are shipped on market rates.

"Current spot market rates on Europe, trans-Pacific and West Coast South America are ludicrously low, and I am offended by the notion that those of us who promise long-term volume and stick to our contracts are subsidizing the idiotic, market share-grabbing behaviour of carriers," said one major global shipper.

Meanwhile, the Asia-U.S. East Coast spot rate reportedly rose 3 percent to $2,951 per 40-foot container, bringing it to just 8 percent below the rate of same week last year.

In June, the Boston Consulting Group (BCG) says that the completion of the Panama Canal expansion could mean as much as 10 percent of East Asia container traffic currently going to the U.S. West Coast would switch to East Coast ports by 2020.