The Drewry World Container Index (WCI) saw a 3% increase this week, reaching US$2,286 per 40ft container. This marks an end to three consecutive weeks of declines, driven by a strengthening of freight rates on both Transpacific and Asia-Europe trade routes. The rebound is primarily attributed to new Emergency Fuel Surcharges (EFS) and Peak Season Surcharges (PSS) implemented by carriers, influenced by ongoing geopolitical uncertainty and rising operational costs stemming from the Middle East crisis.

Transpacific Rates Surge:

Spot rates from Shanghai to New York climbed 7% to US$3,721 per 40ft container, while rates from Shanghai to Los Angeles rose 5% to US$3,062 per 40ft container. Notably, MSC increased its Emergency Fuel Surcharge on the Asia-US East Coast route from US$430 to US$644 per 40ft container. On the Asia-US West Coast route, this surcharge increased from US$272 to US$467 per container. Additionally, CMA CGM introduced a Peak Season Surcharge of US$2,000 per 40ft container, effective May 1st. Drewry anticipates further increases in Transpacific trade freight rates next week.

Asia-Europe Market Shows Stability:

Despite carriers announcing higher Freight All Kinds (FAK) pricing for mid-May, rates on the Asia-Europe trade lane remained relatively stable. Rates from Shanghai to Rotterdam increased by 2% to US$2,170 per 40ft container, and rates to Genoa saw a 1% increase to US$3,075 per container. Hapag-Lloyd, CMA CGM, and MSC have announced new FAK rates between US$3,500 and US$4,500 per 40ft container for Asia-North Europe services, and between US$4,500 and US$4,600 for Asia-Mediterranean trades, effective May 15th. However, Drewry notes that the successful implementation of these increases is uncertain due to weak demand and excess vessel capacity across the market.

Carriers Continue Capacity Management:

Shipping lines are actively managing capacity through blank sailings and network adjustments. Effective capacity is projected to decline by 3% month-on-month on Asia-North Europe routes and by 10% month-on-month on Asia-Mediterranean services during May. Drewry forecasts that Asia-Europe trade rates will remain stable next week.

Hormuz Tensions Impact Market:

The report highlights carriers’ continued caution regarding operations around the Strait of Hormuz, as ongoing geopolitical tensions significantly influence global shipping markets. Shipping lines are proactively adjusting pricing through Emergency Fuel Surcharges, Peak Season Surcharges, and firmer FAK levels, indicating a highly reactive market despite stable vessel movements.

Drewry World Container Index rebounds as Transpacific rates rise