The WCI rose 5 percent year-over-year last week, but the SCFI is now down 9.5 percent compared with the same 2017 period.
Two of the primary indices for measuring container freight rates are once again heading in the opposite direction after carriers significantly reduced capacity in the major east-west trade lanes.
The Shanghai Shipping Exchange’s composite Shanghai Containerized Freight Index, which aggregates spot rates on 13 different outbound trades from Shanghai, fell 3.9 percent on a sequential basis last week to a reading of 793.76, down 9.5 percent from 837.42 as of July 21, 2017.
The World Container Index, produced by London-based maritime shipping consultant Drewry, on the other hand, grew 3.3 percent from the previous week to $1,487 per FEU, a 5 percent increase from the same period last year.
On an individual trade lane basis, spot rates as measured by the SCFI from Shanghai to Europe slid 2.2 percent last week, from $882 per TEU to $863 per TEU, while rates from Shanghai to the Mediterranean slipped 2 percent, from $887 per TEU to $869 per TEU.
Pricing from Shanghai to the U.S. West Coast dropped 4.5 percent, from $1,685 per FEU to $1,616 per FEU, while rates to the U.S. East Coast fell 2.2 percent, from $2,710 per FEU to $2,650 per FEU.
According to Drewry, rates from Shanghai to Rotterdam were unchanged on a sequential basis at $1,663 per FEU last week, but were down 2 percent compared with the same 2017 period. And spot rates to Genoa were up 1 percent week-over-week and unchanged from a year ago at $1,616 per FEU.
The differences between the two indices were much more apparent, however, in the transpacific trades.
Eastbound WCI rates from Shanghai to Los Angeles jumped 11 percent to $1,631 per FEU, a 31 percent increase compared with the same 2017 period, while rates to New York were up 4 percent sequentially and 22 percent year-over-year at $2,677 per FEU.
Transatlantic pricing also remained in positive territory, staying steady from the previous week but rising 13 percent year-over-year to $1,942 per FEU.
In its weekly analysis, Drewry noted that the average composite WCI so far this year now stands at $1,381 per FEU, down 9.5 percent from the index’s five-year average of $1,527 per FEU.
Drewry said it expects rates to continue to grow rates next week, as recent reductions in capacity begin to put upward pressure on pricing.
Major east-west carrier alliances have also been aggressively slashing services in an attempt to better align supply side capacity with demand.
In the transpacific, the 2M Alliance suspended its TP1/New Eagle string before announcing plans to team up with ZIM in a vessel sharing agreement that will see the number of strings operated by the group in the Asia-U.S. East Coast trade drop from seven to five.
THE Alliance, meanwhile, is consolidating its Asia-U.S. West Coast PS5 and PS8 loops, with the last sailing of the PS8 commencing later this week.
As a result, estimated weekly allocated capacity between Asia and North America has already dropped 1.7 percent since the end of June and will continue to fall in August, according to a recent analysis from ocean carrier schedule and capacity database BlueWater Reporting.
A tightening of capacity could potentially result in increased rates, but shippers and carriers should also be keeping a close eye on international trade policy coming out of Washington, D.C. Should the Trump administration’s tariff battle with China continue to escalate, volume growth in the transpacific could suffer, meaning these reductions in capacity may not have as significant an impact on freight rates as one could expect otherwise.
Container freight rate indices disagree again
