Freight Investor Services’ head of air and containers Peter Stallion said in a Baltic Exchange commentary that heading into July, the outlook for container shipping is becoming more opaque.
The situation has been highlighted by unsuccessful attempts to raise Transpacific rates in the middle of record newbuilding deliveries, even as the third quarter is supposed to be the best period of the year for container shipping.
However, growing optimism about the Asia-Europe trade has seen futures continue to trade out through the end of this year, at decent premiums above spot rates, with most of the focus on the FIS’ FBX11 China/East Asia to North Europe trade lane.
Using FBX11 4Q 23 as an indicator, values have buffeted around a steady range since April 2023 – with values falling from a high of US$2,300 in April to a low of US$1,825 in mid-May before finally trading at US$2,050/FEU in June. FBX11 3Q 23 saw a similar pattern, falling from a high in April of US$2,500/FEU before shedding 32% in value to US$1,700 mid-May, subsequently trading at US$1,975/FEU.
As a result, near-dated futures are commanding approximately a 70% premium above prevailing spot prices on the Asia-Europe route through June.
Shortly after, Maersk Line announced a rate hike on the Asia-Europe trade lane, attempting to bring spot prices up to US$1,900 by the end of July.
Stallion observed, “It is interesting to see that rate announcements come directly in line with the futures trading, highlighting the value futures contracts have even with spot rates on comparative doldrums.”
The renewed focus on the Asia-Europe route also comes with a shift in capacity (led by Maersk and MSC) away from the Transpacific trade and into Asia-Europe, with HMM even starting a solo service on the Asia-Mediterranean route as a signifier of its strength.
Stallion cautioned, “Whilst a good sign for those hoping for effective capacity management on a trade lane that is suffering from overstocked inventories and lack of demand, there is a risk that the shift of capacity into other routes could result in oversupply. This would impact the likelihood that Maersk’s recent rate gamble could fail.”
Martina Li
Asia Correspondent
