Most of the big shipping companies are trying to impose rate increases. Announcements of general rate increases (GRIs) on FAK spot rates for November loadings in Asia are proliferating. This time, MSC is not holding back, proposing FAK rates for 40’ containers of USD2,700 for voyages from the Far East to North Europe, USD3,000 to the East Med and USD3,200 to the West Med.
Is the market turning in the longer term? It is unlikely. The drivers of the current increases are more conjunctural than structural. Rates are showing some firmness at the moment but the market can clearly look forward to more roller-coaster rate movements.
For the shipping companies, the rates question is important. Getting rates back under control in November and December should enable them to improve their operating results, which took some punishment in the third and early fourth quarter. After massive early loading in the early part of the year, the summer and pre-Golden Week period was lacklustre. The shipping companies are betting on a small recovery in demand before the end-of-year festivities. Additionally, it is very much in their interest to try to increase rates so as to put themselves in a better position for the annual contract negotiations. It is better to try to start the negotiations when rates have stopped falling, even if the sword of Damocles of a possible return of traffic to the Suez Canal is affecting the negotiating climate in any case.
Increasing freight rates looked to be all the more important for the fact that the shipping companies faced partly unexpected additional costs as a result of increased tensions between the United States and China over reciprocal ship taxation. In a sudden twist, however, these taxes were suspended for a year following a meeting between Donald Trump and Xi Jinping. In the meantime, however, they have disorganised the market (...)
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