Container Shipping Quarterly

Special Report

Intra-Asia container rates rebound on typhoon-tightened capacity

In addition to strong demand , port operations in Asia have been buffeted by multiple severe storms . Tieu Bao Truong / Shutterstock . com

By Keith Wallis and Bency Matthew

Container lines are looking to capitalize on a tightening intra-Asia market — fueled by strong Chinese demand and congestion-induced blank sailings — with peak season rate hikes ranging from $ 100 to $ 1,000 per TEU , depending on the lane .

Intra-Asia rates on most major lanes had weakened before China ’ s Golden Week in early October and other Asian festival holidays , during which factories pause or slow production , but sharply reversed in the last two weeks of October , according to carriers and forwarders .

“ Blank sailings , together with strong demand after the holidays , meant GRIs [ general rate increases ] were successful and space was overbooked for October ,” Tiffany Chan , intra-Asia procurement manager for FIBS Logistics , told the Journal of Commerce . For example , spot rates from China to Dubai that had fallen to $ 700 per FEU in early October have since jumped to approximately $ 1,200 per FEU .

Average spot rates from China to India saw three- to four-fold gains during September and October , data shared with the Journal of Commerce from freight forwarders reveals . Pricing from Shanghai to Nhava Sheva or Mundra ( West India ) reached $ 1,800 per TEU and $ 2,100 per FEU , respectively , at the end of October , up from $ 500 per TEU and $ 600 per FEU in the early part of September .

The rate increases reported by forwarders and carriers , however , aren ’ t being captured by Drewry ’ s intra-Asia container index , which dropped 15 % to $ 500 per FEU in the two weeks ending Oct . 15 . Only two of the 28 routes covered by the index — Busan – Shanghai and Shanghai – Yokohama — saw rates rise in October , Stijn Rubens , senior consultant at Drewry Supply Chain Advisors , told the Journal of Commerce .

Congestion decreased capacity

Port operations have been hit by a series of typhoons that have caused vessel delays in southern and eastern China , Vietnam , South Korea and Japan . In an Oct . 24 advisory , CMA CGM said terminal operations in the Philippines were slowed by Typhoon Trami .

Forwarders who spoke with the Journal of Commerce have linked the rate boost to the cargo backlogs from a raft of intra-Asia blank sailings in September and higher Indian import demand driven by the traditional Hindu festival season , which runs from September through November .

“ Vessel space issues have cropped up again ,” said Dharmendra Gangrade , head of logistics management at India-based conglomerate Larsen & Toubro , which has significant industrial input sourcing from China . “ We are told there have been fewer vessel calls to China due to volume declines .”

Capacity between India and Asia-Pacific has been tight after several regional and mainline carriers repositioned excess capacity that had been in use on the China-India trade back to Middle East routes , forwarders explained .

“ GRIs were successful , and space was overbooked for October .”

There are signs that intra-Asia rates were strengthening even before the October holidays . SITC International ’ s average revenue per TEU rose to $ 691 in the third quarter from $ 632 in the first half of the year , the Hong Kong-listed carrier said in a stock exchange filing Oct . 23 .

Pricing could rise further if planned GRIs and surcharges are successful . CMA CGM subsidiary CNC Line , for example , is seeking an increase of $ 100 per TEU from Oct . 28 on shipments to all countries in Southeast Asia , Japan , South Korea and Bangladesh . Maersk , meanwhile , is imposing a raft of peak season fees ranging between $ 1,000 per TEU and $ 1,500 per FEU on dry and reefer cargo from North Asia , including China , Vietnam , Singapore and the Philippines , to South Asia from Nov . 4 .

email : keithwallis @ hotmail . com email : bencymathew @ gmail . com

28 Journal of Commerce | November 18 , 2024 www . joc . com