Increased freight rates start year on high note for container shipping lines

Container shipping firms are hoping for a better year as freight rates rebound in the lead-up to the Lunar New Year holiday and the nagging problem of overcapacity eases during the year.

Surplus supply, which has hit the liners heavily since 2008, should narrow to 1.5 per cent from 2.5 per cent last year, a forecast by 11 institutes and research houses said.

Shipping lines were quite successful in raising their rates as planned last month and at the beginning of this month as an earlier Lunar New Year, which occurs at the end of January this year, helped drive rush orders.

Spot rates on the China-Europe route rose 17 per cent week on week, or 39 per cent year on year, in the week to January 3, according to the latest JPMorgan report, citing the Shanghai Export Container Freight Index.

The spot rate from China to the Mediterranean Sea rose 14 per cent week on week, or 55 per cent from a year earlier.

China-US spot rates rose just 1 per cent week on week last week, as larger vessels are deployed on the route. Spot rates for China to the US west coast plunged 18 per cent year on year, however, while rates to the east coast tumbled 7 per cent last week.

“The freight rates seem to have increased very rapidly on the European route, but they are now at a level that marginally covers our costs,” said Huang Xiaowen, managing director of China Shipping Container Lines.