Spot container freight rates on the major East-West routes reached a 20-month high this week and have risen above the average of the last 5 years.
The latest weekly reading is $1,770/40ft container for the composite index, reflecting increases on individual lanes to $1,785 for the Rotterdam-New York index (up $4 this week), $2,210 for the Shanghai-Rotterdam index (up $257 this week) and $2,106 for the Shanghai-Los Angeles index (up $545 this week).
On the back of 1 January GRIs, the World Container Index between Shanghai and Rotterdam rose by 13% to reach $2,210 this week. Drewry expects the volume upsurge on account of an early Chinese New Year to support further increases next week.
The last time the WCI composite index exceeded $1,700 per 40ft container was in March 2015, before the 2015/16 price war.
The World Container Index assessed by Drewry composite index, an average of spot rates on 11 transpacific, Asia-Europe and transatlantic routes, has now increased by 62% since the bankruptcy of Hanjin at the end of August last year, when Drewry then described the prevailing rates as “unsustainable”.
“Since last September, we have consistently and rightly warned our exporter and importer customers to expect rate increases in both the spot and contract markets,” said Philip Damas, head of the logistics practice of Drewry.
More recently, the global procurement consultants reported that the Drewry Benchmarking Club Contract Rate Index, based on average Transpacific and Asia-Europe contract freight rate data provided confidentially by shippers, increased in the fourth quarter of 2016, after having fallen for more than 6 consecutive quarters.
“With 2017 contract rates at risk of double-digit increases, now is the time to use the latest e-sourcing tools and strategies to help mitigate cost increases and to avoid a repeat of carrier service failures,” Damas added.
The World Container Index is a weekly container pricing index based on actual agreed freight assessments reported by industry players in Asia, Europe and the US and is not financed or backed by either shipper or carrier interests.