Westbound transatlantic trade lane proves to be world's most profitable
THE westbound transatlantic trade lane, because of a strong dollar and commendable capacity discipline, is one of the few bright spots in container shipping, reports New York's FreightWaves
THE westbound transatlantic trade lane, because of a strong dollar and commendable capacity discipline, is one of the few bright spots in container shipping, reports New York's FreightWaves.
Globally, spot container rates are at yearlong lows averaging US$1,323 per FEU. Meanwhile, spot rates on the Europe-North America East run are up 42 per cent year on year at $2,044 per FEU.
High volumes come with high rates. The trend may yet continue in 2019. The dollar value of European exports into US east coast ports reached $62 billion in the first quarter, a five per cent year-on-year increase, according to the US Census Bureau.
'A lot of this comes down to the strength of the dollar,' said transatlantic specialist ICE Transport president Andrew Rozek. 'The biggest factor is the cost of the goods themselves. To go from $1.40 per euro down to $1.15, that's a lot.'
The container alliances have also maintained stricter capacity discipline than seen on trade lanes from Asia to Europe and the US Those lanes routinely see ships from 10,000 to 20,000 TEU. But the transatlantic market remains home to vessels in the 4,000 to 8,000-TEU range.
Said Mr Rozek: 'On the transatlantic westbound, the vessels are consistently full. By doing what they are doing, they are creating a perfect situation for themselves.'
But transatlantic eastbound rate remains stuck under $500 per FEU due to the lack of backhaul.
The trade imbalance and the need to reposition empty containers prompted Hong Kong's Orient Overseas Container Line (OOCL), now a Cosco unit, to implement a 'Trade Imbalance Surcharge' for all westbound containers from North Europe to US ports of $100 per TEU.
Despite the increases, Mr Rozek said there is little to indicate weakening demand.