CONTAINERS QUARTERLY: European spot rates plummet after early peak season surge

Bearish sentiment dominated the European container markets in the third quarter, as front-haul spot rates plummeted following an early peak season rush as a result of continued diversions away from the Red Sea.

The premature commencement of the peak season in Asia-Europe movements meant market participants stopped looking to secure cargoes earlier than usual. Longer transit times due to Red Sea diversions forced shippers to front load their shipments in anticipation of logistical challenges, such as a lack of container equipment supply, irregular weather patterns and port congestion.

Platts Container Rate 1 — PCR0100 — from S&P Global Commodity Insights, which covers North Asia to North Europe flows, fell a staggering $5,500, or 65%, on the quarter to reach $3,000 per forty-foot equivalent unit as of Oct. 9, following eleven consecutive weeks of freight rate declines.

“Shipping lines expect the market to go down further, they would rather wait as some of them have not finalized services and transit times on routes, so they don’t want to finalize any business just yet,” a forwarder source said.

Front-haul rates into the Mediterranean faired similarly in the third quarter, as Platts assessed ex-Asian shipments on PCR0300 at $3,400/FEU on Oct. 9, down 56.9% from the start of the third quarter, when prices stood at $7,900/FEU.

Sources said participants were readying themselves for negotiations focusing on long-term rates for the upcoming year. Carriers had adopted a wait-and-see approach, given the new alliance collaborations — such as the Gemini Cooperation between Maersk and Hapag-Lloyd — announced for 2025 were still a work in progress.

Container lines Maersk and Hapag-Lloyd on Sept. 10 announced details of Gemini Cooperation, set to launch in February 2025. The liner companies released “two network options,” showcasing routings via the Cape of Good Hope and the Suez Canal, as ongoing shipping disruptions in the Red Sea continue to challenge the region.

“The Suez Canal could be closed for the whole of 2025 given the geopolitical situation is worsening and there doesn’t seem to be an end in sight,” a logistics source said.

Port congestion remained a significant issue in Europe, with delays of up to 30 days reported at Felixstowe port. This prompted carriers to seek alternative routes to avoid disruptions. Despite these challenges, some carriers remained bullish about the market’s long-term prospects.

Eastbound freight falls 50% in quarter

Back-haul container shipments out of Europe and the UK also softened over the quarter, as PCR0200 fell 50% from $400/FEU to $200/FEU on Aug. 19, due to carriers’ strategy to induce more eastbound box movements given weak demand.

Freight-all-kinds rates out of the Mediterranean followed suit, though at a slower pace as Platts Container Rate 4 — PCR0400 — fell $150, or 38%, to $250/FEU at the end of the third quarter on July 24.

Platts launched 10 daily container bunker charge assessments, or PBCs, complementing existing PBCs, to calculate bunker costs for key routes via the Cape of Good Hope. Platts also launched four daily carbon emission charge assessments reflecting carbon emission costs incurred via the Cape of Good Hope effective Sept. 2, 2024. The details of the assessments launched can be found here. New data for variables has been compiled through a wider compilation of Automatic Identification System data and ship specification data from S&P Global Commodities at Sea.
Source: Platts