SIMIC

Gary Howard | Jan 13, 2022

Sand opened his weekly rates update with a forecast that container lines’ strong position in negotiations for long term rates and shippers’ desire to secure capacity will lead to fixing higher long-term rates.

“This means that even if spot rates soften over the year, the average cost of shipping this year will be higher than ever before,” said Sand.

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Fronthaul long-term rates look set to double or triple from those set last January, said Sand, giving the example of average long-term contract rates of $9,300 per feu on the Far East to North Europe route, closer to triple than double their year-ago levels.

Long-term backhaul rates have seen more modest increases over the same period, up 12% to $1,300 per feu.

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“We are much earlier in negotiations for long-term rates going into the US than for those from the Far East to Europe, but shippers should brace for sharp increases in the rates they are paying. Currently, the Xeneta platform shows that long-term contracts signed in the past three months from the Far East to the US East Coast have gone from USD 3 700 in January 2021 to USD 7 000 this year,” said Sand.

Spot rates on the Far East to North Europe and Far East to Mediterranean routes both set record highs, while backhaul rates from North Europe to the Far East eased 5% over last month to $1,300.

Softening transpacific rates for both spot and long-term contracts over recent months have not offset increases over the past year, and rates remain well above pre-pandemic levels.