The World Container Index by Drewry put up its best-ever show since December 2020 to end at US$1,761, registering an 11.7% gain, as head-haul rates across Shanghai- US, Shanghai- Europe and Shanghai- Mediterranean routes logged gains anywhere between 9% and 25%, even as the backhaul and transatlantic trade lanes remained muted.
The price action, which also saw some revised commentary from Drewry from a ‘marginal decline on east-west trades’ stance to ‘be “stable, overall” for the next weeks’, has now trended upwards for the fourth consecutive week ever since the post-pandemic bottom of US$1,474, underlining a 19% improvement in under a month.
The captain of the rally has been the China-US West Coast rates which have appreciated over 45% over the last five weeks, with the China-US East Coast rates giving it company. The China-Europe trade saw a 25% rally for the week, with the China-Mediterranean trade pulling up 9%.
A barrage of rate increases and surcharges have hit the market, ironically as the contract rates were reported dipping to record lows, just around the end of July 2023. While newer capacity has been hitting the market, carriers are also mulling the prospect of withdrawing some of the older fleets and maintaining a capacity discipline across trade lanes.
The four-week sustenance/continuous increase has been the longest since January 2022, and also the first for a spate of gains since the Gross rate increases were effected early in the year.
With inventory levels down in the US, and Europe & US recovering from their highest inflationary points, the focus will be on inventory build-up management for the holidays and the winters. That would take a call on the heading of the rates.
Author of the article: Gautham Krishnan
Gautham Krishnan is a logistics professional with Fluor Corporation, in the area of project logistics and analytics, and has worked in the areas of Project Management, Business Development and Government Consulting.
