International Maritime

Asia – North Europe and Med rates are still up nearly 300 % and 700 % compared with last year . Peter Gudella / Shutterstock . com

Ocean rate spike slams brakes on low-margin European imports

By Greg Knowler

European importers of lower-margin goods and bulkier products from Asia are curbing shipments as soaring ocean rate levels and surcharges levied by carriers to guarantee space on the westbound trade lane make it economically unviable to load the cargo , according to forwarders and shippers .

The decline in shipments appears to be having the unintended — but welcomed — effect of putting the brakes on the overheated Asia – Europe spot market . Average rates from Asia to the Mediterranean fell $ 160 to $ 7,620 per FEU in the week of July 12 , while Asia – North Europe pricing slipped $ 80 to $ 8,420 per FEU , according to Platts , a sister company of the Journal of Commerce within S & P Global .

“ Some market participants have stopped shipping their cargo because they are not willing to pay these rate levels , and that is likely why we are seeing a slowing down of the rate increases ,” the logistics director for a European retail chain told the Journal of Commerce . “ It is not falling to North Europe but maybe , just maybe , the rates are peaking now and will start to get softer through Q3 .”

Following the start of attacks by Houthi militants in the Red Sea late last year , carriers were forced to reroute ships around southern Africa and quickly began to levy a range of surcharges and rate increases to recoup the added costs .

With spooked shippers bringing forward Asia-Europe orders , an early peak season developed , and carriers began to slash allocations for many cargo owners as demand exceeded available capacity , forcing a significant amount of volume onto the expensive spot market .

That situation has prevailed for six months , and even though the spot market is showing signs of peaking , rates are still almost seven times higher than at this point last year , making some products not worth shipping , according to the head of ocean freight at a global forwarder .

“ Cargo owners in Europe are thinking about whether it makes sense to ship at current prices , and low-margin products are definitely being delayed ,” the executive told the Journal of Commerce July 11 .

“ But it is not only the low-margin goods that are being affected ,” the source added . “ In the white goods sector , how many fridges or washing machines can you fit into a

Red Sea crisis pushes Asia – Europe rates to post-pandemic high

Container spot rates from Asia to N . Europe and Mediterranean , in USD per FEU

USD per FEU

$ 12,000

$ 10,000

$ 8,000 $ 10,000 $ 6,000

$ 4,000

$ 2,000

$ 0

Source : Platts , S & P Global

L Jan 2023 Jul Jan 2024 Jul

North Asia to UK Continent North Asia to Mediterranean

© 2024 S & P Global

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18 Journal of Commerce | July 29 , 2024 www . joc . com