Asia-Europe freight rates continued to fall last week, slipping below the break-even point of US$1,000 per TEU, according to the Shanghai Containerised Freight Index's (SCFI).
Rates between Shanghai and north-west Europe hit US$988 per TEU, a plunge of $122 per TEU from the week before, and representing an overall decline of 44 per cent since January when the market was buoyed by the build-up to Chinese New Year.
"Most spot rates on an FAK [freight all kinds] basis are $900-1,000 per TEU out of China base ports to northern Europe, and they are going to fall further," one forwarder told London's Loadstar.
Some attributed the decline to poor carrier pricing discipline and overcapacity, made worse by weak European demand. Another said this made March general rate increases, announced in January and February, seem like wishful thinking.
Hong Kong's OOCL sent an advisory this week announcing that its spot rate on the route was to be reduced by another $150 per TEU, a discount valid till the end of the month. The carrier had earlier announced a GRI to come in next week.
Said Freight Investor Services (FIS) derivatives broker Richard Ward: "This reflects the market's views for further declines in the run up to April and the expectations that the GRI will not be sustained due to market fundamentals."
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