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Home Most Popular FAK rate hike fuels jump in long-haul freight rates

FAK rate hike fuels jump in long-haul freight rates

Long-haul freight rates pushed up for the second straight week ahead of the 1 November hike in freight-all-kinds (FAK) rates, supported by capacity withdrawals.

The Shanghai Containerised Freight Index (SCFI) showed that on 28 October, Shanghai-North Europe rates averaged US$769/TEU, up 32% from the previous week.

There was a 10% increase in Shanghai-Mediterranean rates, to US$1,221/TEU, while Shanghai-US West Coast rates went up by 10%, to US$1,916/FEU, and Shanghai-US East Coast rates grew by 7%, to US$2,361/FEU.

Consultancy Linerlytica however, warned that like previous gains, these could only be sustained with capacity discipline, as fundamentals remain weak.

The consultancy noted that German mainline operator Hapag-Lloyd has chartered nine 14,372 TEU ships from SFL and Enesel for five years after the 10-year charter on those ships to Evergreen Marine Corporation expired. The first two of the ships, Thalassa Hellas and Thalassa Patris, are being upsized at COSCO Zhoushan to increase their capacity from 13,808 TEU to 14,372 TEU. Thereafter, the ships will be renamed Norfolk Express and Savannah Express, respectively, and will join THE Alliance’s Far East-US East Coast AA7 service in November.

Linerlytica said in its 30 October report, “The positive momentum on the transpacific routes will be difficult to sustain as capacity will increase through November after the cuts in October, while capacity utilisation continues to weaken on services to both coasts.”

The jump in Shanghai-North Europe rates was helped by THE Alliance’s removal of the FE5 service in November. It is the first North Europe-bound service to be withdrawn this year, unlike the 2M and Ocean alliances, which have only blanked sailings impromptu.

Linerlytica stated, “The Ocean Alliance has failed to take any concrete capacity reduction actions which could trigger an eventual push back from its rivals. New vessel deliveries in October exceeded 200,000 teu for the fifth consecutive month while vessel scrapping remains immaterial, with just 22,000 TEU removed in the last 30 days. Competition between the top seven carriers is set to intensify with a record level of new ship deliveries scheduled in the coming year.”


Martina Li
Asia Correspondent





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