Splash247: Transpacific-Europe rate gap blows out to record

Published by Splash247

The world’s two great east-west container trades are moving in dramatically different directions, with the gap between transpacific and Asia-Europe spot rates widening to unprecedented levels.

Clarksons Research said in its latest Shipping Intelligence Weekly that “geographic divergence” continued in the container freight market, with Shanghai-North Europe rates falling 5% week on week to $2,425 per teu, while transpacific rates continued to climb on resilient demand. Clarksons said the differential between the two trades has now reached “the widest levels ever seen by some margin.”

The scale of the split is even clearer in Xeneta’s latest like-for-like feu data. On September 17, Asia-US east coast spot rates stood at $11,259 per feu, compared with $4,103 per feu from Asia to North Europe – a gap of more than $7,100 per feu.

The US east coast market is now within touching distance of pandemic records. Xeneta calculates current rates are only 11.2% below the all-time high of $12,683 per feu set in January 2022. Asia-US west coast rates, at $7,960 per feu, are 17.9% below their covid peak.

The reasons behind the divergence are increasingly structural. On the Asia-Europe trade, more services are again routing through the Red Sea, restoring capacity and reducing the tonne-mile inflation created by Cape diversions. That is helping push freight lower even as other sectors of shipping continue to benefit from Middle East disruption.

The transpacific, by contrast, is being supported by resilient cargo demand and carrier discipline. Xeneta said offered capacity from Asia to the US East Coast is 6-7% higher in September than August, yet rates have continued climbing. Chief analyst Peter Sand said carriers were “seizing the opportunity while the market is hot” with Sand expecting another rate push around the start of October and China’s Golden Week.

Meanwhile, the world’s largest container trade zone – the intra-Asia trades, continue to report record high earnings. 

Drewry’s Intra-Asia Container Index rose 6% last week to $1,402 per feu, marking a fourth consecutive record high. The consultancy blamed geopolitical disruption, typhoons and constrained capacity, with pre-Golden Week demand also lifting rates from China.