Date: 26.04.2023

Asia to Europe freight rates may mirror transpacific price increases

European importers from Asia are nervously watching developments in the US, as transpacific carriers succeed in implementing GRIs, increasing shipping rates to the West Coast, in a move that may be repeated on the Asia to Europe trade lane.

The Xeneta Asia-US West Coast index increased 39% last week, while the Baltic Index jumped 71%, and the container shipping lines are planning another wave of transpacific GRIs on the 1st May.

Hapag-Lloyd, CMA CGM, Evergreen, ONE, Zim and Cosco have announced GRI of $1,000/40’, while HMM plans to levy $2,000/40’.

JOC reported that there are indications that West Coast container volumes may be rising, while vessel wait times has increased at major US ports in recent weeks and with spot rates increasing for the fourth consecutive week, the market may have passed the bottom of the market.

The transpacific shipping lines regularly impose increases at this time of year, to increase base rate levels, ahead of annual contract negotiations with their biggest volume (BCO) shippers.

The lines are likely to roll out monthly increases ahead of the peak season and to help these GRIs stick, they will keep capacity tight by continuing to blank sailings.

On the Asia-Europe trade-lane, shippers should be bracing for GRIs for shipments from Asia from 1st May, with space already tight and carriers rolling cargo, particularly low-rated heavy containers.

Despite some blanking success from Asia to Europe, with rates stabilising over the past few weeks, getting GRI’s to stick against a backdrop of weak demand will be difficult and it only needs one of the smaller lines to start offering discounted rates for market share, for the GRI to collapse.

On the Asia to Mediterranean lane, rate indexes moved up 6% last week, while on the transatlantic rate erosion has continued, with Europe to US East Coast indexes down 5%.

We negotiate long-term and FAK contracts with shipping lines across all three alliances to secure space and rates that provide the best alternatives and options, whatever the situation.

To learn how we can support your East-West, transpacific or transatlantic trade EMAIL our Chief Commercial Officer, Andy Smith.