FBX Index April: Looking forward

The big story of the month, on top of all of the stories of surging demand hitting an absolute cap on capacity, was the blocking and subsequent clearing of the Suez Canal is blocked by the Evergreen ultra-large container vessel Ever Given.

Much of the forward price for April has reacted in line with a near completely flat spot price, even after transpacific pushed up last week. FBX13 and 11 had even continued to correct downwards for lifted cargoes as much of the end of March had already been priced in. The near unanimous verdict in the market is for impacts on congestion and equipment displacement to roll over into price changes over the coming weeks. There was a large, public indicative signal from Maersk on 30 March forecasting that capacity would drop 30% as a direct result of shipping backlogs.

We saw FBX11 Apr21 pricing fluctuate over the course of last week between a low of $7,550 and a high of $7,800, with a corresponding change on FBX13.

We saw FBX11 Apr21 pricing fluctuate over the course of last week between a low of $7,550 and a high of $7,800, with a corresponding change on FBX13. Apr21 and May21 have yet to see a reaction to proposed changes further through April. However for the most part this is a result of a ‘wait and see’ attitude on behalf of most BCOs. We’ve also seen a corresponding reaction in the air freight market, seeing a bump in chartering as capacity remains heavily stretched. Underlying all of this, has been a genuine demand spike for fuels, given higher consumption to sail via the Cape of Good Hope route – this has come on the back of a generally bullish fuel price outlook, with price gains from Suez slowly being rebuilt.

Beyond Suez, global capacity remains stretched. However forward orders continue to increase. There has been a substantial divergence of opinion on the shipbuilding front, with ship orders increasing 15% since the start of the year. Maersk remains one of the few carriers that hasn’t maintained an ultra-large container ship order book into 2021. Throughout the month this has had a slightly negative impact on FFA pricing, however this has changed on the entry of significant sell-side counterparties into the FFA markets – pricing in triple digit changes particularly for FBX01 all the way through into Cal22. On Asia to Europe we’ve also seen strong interest to price in Q3 2021 onwards, with little real focus on the next few months. The one main change we’ve seen on the lane is the loosening up of previously tight pricing – the Suez Canal incident provides stimulus for further volatility, generating more interest for the FFA.
Source: The Baltic Briefing