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By John Ainger and Maria Tadeo (Bloomberg) — Australia wants to boost exports of green hydrogen to the European Union as the bloc seeks to cut emissions in its most energy-intensive sectors. “Australia...
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MOSCOW, Jan 31 (Reuters) – Russia supplied Europe with some 17 million tonnes of liquefied natural gas (LNG) last year, up about 20% from 2021 volumes, Refinitiv Eikon data showed on Tuesday,...
gCaptain’s favorite maritime historian and the volunteer fire captain behind the popular Youtube channel “What’s Going on With Shipping“ Sal Mercogliano explains some of the issues behind a recent photo…
gCaptain’s favorite maritime historian and the volunteer fire captain behind the popular Youtube channel “What’s Going on With Shipping“ Sal Mercogliano explains some of the issues behind a recent photo...
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The UK Maritime Pilots Association is praising the actions of three ship pilots in preventing one of the world’s largest containerships from running aground in the Solent after a loss...
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MOSCOW, Jan 31 (Reuters) – Western oil tankers ramped up their shipments of Russian crude in January as prices for Moscow’s flagship Urals grade held below an international price cap, according to...
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Hapag-Lloyd is reporting “extraordinarily strong” financial results in 2022 amid an increase in average freight rates, but warns that rates had already “significantly come back down” by year-end. 2022 marked...
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MOSCOW, Jan 30 (Reuters) – Asian markets are showing no let up in their demand for Russian oil, absorbing a big rise in seaborne exports of Urals crude this month and helping...
The rise of East Coast ports has been largely credited to the fall of West Coast ports — to shippers switching routes following the expiration of the West Coast port labor contract in July. But that’s only part of the story.
Even after recent declines, Europe-East Coast spot rates remain almost triple pre-pandemic levels and more than triple rates in the Asia-West Coast market.
Indexes falling but still very high
Different spot rate indexes provide different numbers but generally show the same trend. The Drewry World Container Index (WCI) put Rotterdam-New York spot rates at $6,322 per forty-foot equivalent unit in the week ending Thursday, unchanged from the week before. In contrast, Drewry’s Shanghai-Los Angeles Index and its global composite are just above $2,000 per FEU, close to pre-pandemic levels.
While the WCI Rotterdam-New York index has fallen 15% from its all-time high in November, it’s still 2.6 times higher than it was in January 2020.
Blue line: Rotterdam-NY. Green line: Shanghai-LA. Orange line: global average. (Chart: FreightWaves SONAR)
The Freightos Baltic Daily Index assessed Europe-East Coast spot rates at $5,210 per FEU on Friday, relatively unchanged since the beginning of this year.
This is down 27% from November, but still 2.9 times January 2020 levels.
Blue line: Europe-East Coast. Green line: China-West Coast. Orange line: global average. (Chart: FreightWaves SONAR)
Xeneta tracks both contract rates and spot rates. Its short-term index put North Europe-U.S. East Coast rates at $6,086 per FEU as of Wednesday. Long-term rates for this trade were under $6,000 per FEU as of mid-January.
Spot rates have fallen below contract rates in almost all of the world’s container trades — but not yet in the trans-Atlantic westbound lane. In markets where spot rates have sunk well below contract prices, carriers have agreed to lower some of their long-term rates in mid-contract, further reducing revenues. That renegotiation dynamic does not apply in the trans-Atlantic.
Europe-U.S. rates remain “historically strong,” said Xeneta Chief Analyst Peter Sand earlier this month, adding that both short-term and contract rates in January 2021 “were roughly a third of today’s prices.”
Carriers shift more ships to the Atlantic
Rate strength continues to attract more ships to the trade, which are being shifted in from less profitable markets like the trans-Pacific. The new capacity is “now undermining the high rates that attracted the vessels in the first place,” noted Sand.
Alphaliner has reported numerous service additions: Cosco, OOCL and ONE doubled the sailing frequency of their East Med-East Coast “EMA” service. THE Alliance and Ocean Alliance reinstated calls in New York and Savannah, Georgia, for their joint Med-East Coast “AL6” loop. Ellerman City Liners launched a new North Europe-East Coast service. Evergreen upsized its ships in the trans-Atlantic market. The 2M alliance between Maersk and MSC added three ships to its coverage.
Platts, a division of S&P Global, believes these additions are having an increasingly negative effect on spot rates. Unlike the Drewry and Freightos indexes, which were steady last week, Platts’ trans-Atlantic assessment plunged. Its Europe-East Coast index fell $800 per FEU, to $5,000 per FEU, down 14% from the week before.
Sources told Platts that the sudden drop was due to capacity additions and that they expect rates to keep falling.
Imports from Europe exceptionally strong in 2022
Customs data compiled by the U.S. Census Bureau shows that containerized imports from Europe are dominated by building supplies, wine and other beverages, furniture, automotive parts, paper products, and food.
According to the latest data, containerized imports from Europe in January-November were up 2% year on year and up 13% versus the same period in 2019, pre-COVID.
While imports from Europe fell in November versus October, they were still 21% higher than volumes in November 2019.
(Chart: American Shipper based on data from U.S. Census/U.S. Customs)
One volume driver last year was the strength of the dollar versus the euro. This currency advantage has been reversing over the past three months.
Maritime Strategies International (MSI) said in a report on Friday: “There has been a brightening of investor sentiment toward the European economy, which could result in an influx of money into Eurozone financial assets, strengthening the euro against the dollar. This could further weigh on U.S. imports from the region.”
As a result of the currency factor, reduced U.S. consumer demand and the unwinding of congestion at East Coast ports, MSI expects trans-Atlantic rates “to drop further in the coming months.”