All-inclusive spot market rates depressed as Shanghai lockdown tightens
Premium spot bookings from Chinese base ports remained under pressure in the week to May 13 amid muted demand for Chinese export cargoes.
As Shanghai wraps up another week of coronavirus shutdowns, production capacity and resulting export volumes have continued to fall – keeping rates under pressure – despite a rise in canceled sailings as liners try to make up for a downward trend in rates.
“China’s continued zero-tolerance policy towards COVID in 2022 has created an ever-present threat of port closures and operational restrictions, as seen in both Ningbo and Shanghai. Alongside the Chinese New Year, these restrictions will likely have eased some burden on outbound volume flows from China, but have also likely created an additional backlog,” market analyst Sea-Intelligence said in a May 11 report.
Authorities said on May 13 that Shanghai’s restrictions were to be lifted from May 20, but sources note it will take much longer for production capacity to resume.
In the week to May 13, S&P Global Commodity Insights heard most deals traded on an FAK basis, as justification for premium loadings and disport allowances was thin amid large pockets of available FAK space. However, sources suggest that priority equipment, loading and transit fees may still command a premium of $1,000 to $3,000 over FAK base rates.
“Premiums are definitely coming down, they really aren’t there,” said a US-based freight forwarder, adding that FAK rates are holding up despite weak demand.
Further decline in the Southeast Asian market
All-inclusive premium rates on the Southeast Asia-North America route fell further during the week ended May 13 as continued uncertainty surrounding North Asia operations further helped the Asia market Southeast, according to sources.
During the week, S&P Global heard all-inclusive booking rates from Indonesia to the East Coast of North America (ECNA) at $13,600/FEU, and $10,100/FEU to the East Coast. Western North America, or WCNA. That’s down from the $14,000/FEU (ECNA) and $13,000/FEU (WCNA) values heard in the market during the week ended April 29, sources said.
“The situation in China [lockdown and limited industrial activity] will take at least until June to get back to normal,” said an Indonesia-based freight forwarder, adding that this has helped all-inclusive booking rates to come down as carriers now have additional capacity to deploy in the region until at least the end of May.
From Singapore, all-inclusive fares have been heard as low as $12,000/FEU to ECUS and $10,125/FEU to the West Coast. However, rates have also been heard around $15,000/FEU for some North American base ports from Singapore.
In the South Asian market, all-inclusive booking rates from Bangladesh to the East Coast of North America were between $16,000 and $22,000/FEU.
“Depending on the carrier, we pay between $16,000 and $22,000/FEU. Significantly higher than others [India]said a Bangladesh-based logistics provider. “However, the situation at the port [Dhaka] is much better.