This month saw the most significant fall in rates on the westbound transatlantic trade lane since prices started moving downwards in May last year.
However, unlike on fronthaul trades out of the Far East, rates from North Europe to the US East Coast are still considerably higher than their pre-pandemic levels. As of 24 April, spot rates had fallen to 3 090 USD per FEU, with long-term contracts now at 4 750 USD per FEU.
Slow motion slip
Rate developments on this key corridor appear to follow the fronthaul Far East trades with a lag of several months. North Europe to US East Coast spot rates peaked in April 2022, far later than those out of the Far East, while this trade was also the last major trade where spot rates declined (playing a delayed catch-up with the Far East to North Europe and Far East to US East Coast corridors). The same lag was experienced when rates were rising back in 2021.
The start of the year saw spot rates fall below long-term rates on the westbound transatlantic, and the gap between the two has been growing ever since. There is currently a spread of USD 1 660 per FEU.
With new long-term contracts into the US entering validity at the start May, expect contracted rates to drop further.
A question of capacity
Whereas spot rates on the Transpacific increased in mid-April thanks to GRIs, high capacity on the transatlantic route mean rates are still falling.
In mid-March, Sea-Intelligence reported a 25% increase in capacity compared to the same time last year between North Europe and the US East Coast. This compares with a 7% and 5% year-on-year increase in capacity between the Far East and US East Coast and Far East and North Europe respectively.
So, for the time being, the transatlantic corridor appears to be the market’s fronthaul outlier, responding to macro-market trends at a slower pace than other key routes. The reasons behind this include the increased levels of capacity, and the impact this exerts on rates, and its relative stability compared to Far East trades. Keep watching the data to discover if rates here continue to fall, and how evolving European and US economic developments might impact transatlantic supply chains going forward.
The 'Weekly Container Rates Update' blog analysis is derived directly from the Xeneta platform. In some instances, it may diverge from the public rates available on the XSI ®-C (Xeneta Shipping Index by Compass, xsi.xeneta.com. Both indices are based on the same Xeneta data set and data quality procedures; however, they differ in their aggregation methodologies.
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