SeaIntel Maritime Analysis says some carriers appear to be moving freight in the Asia-Europe trade lane at below the price of fuel.
In the most recent issue of its SeaIntel Sunday Spotlight
newsletter, the company says it calculated the average bunker adjustment factor for the trade by averaging those of the top 15 carriers.
"When subtracting the BAF, which is there to compensate for the fuel costs, the base rate according to the Shanghai Container Freight Index dropped to a mere $38 per TEU for a shipment from Shanghai to North Europe when compensating for the market BAF. Due to the different BAF levels across the carriers, we now see six of the 15 carriers with a negative base rate when the Shanghai spot rate is taken as a baseline. Furthermore, the $38 per TEU also includes Suez Canal surcharges as well as piracy-induced surcharges across the Aden Gulf," the analyst said.
Lars Jensen, the chief executive officer of SeaIntel, noted that unlike the transpacific, where the Transpacific Stabilization Agreement publishes regularly updated recommended guidelines for bunker surcharges to reflect fleet characteristics, slow-steaming, and low-sulfur fuel requirements, "on Asia-Europe it is a mixed bag of carriers who have modified the formula, and those who have not."
As a result, he said as to whether BAFs "actually cover fuel costs, it is a tricky question to answer - partly because of the highly varying fuel consumption across vessels (and you have multiple different vessels on the many strings for even a single carrier). Secondly because you have multiple different carriers onboard the vessels, but with an unknown distribution of slots amongst them. What we do know is that the BAF for the carriers is correlated to a very high degree to bunker fuel changes though."
SeaIntel said "the situation for some carriers may be even worse, as we have in the past week received offers from freight forwarders quoting as low as $600 per TEU from China to the Mediterranean - which is a level $200 part TEU below the Shanghai spot index."
On Friday, the Shanghai Shipping Index was 1009.48, down 17.37 points from a week earlier. The index is calculated by polling 30 companies on what their estimates for freight rates are on 15 trade routes from Shanghai to different parts of the world.
All four of the major east-west trades showed declining rates last week. The Shanghai-to-North Europe index fell $65 to $731 per TEU; Shanghai-to-the Mediterranean fell $36 to $805 per TEU; Shanghai-to-the U.S. West Coast fell $70 to $1,997 per 40-foot equivalent unit (FEU); and Shanghai-to-the U.S. East Coast fell $61 to $3,152 per FEU. - Chris Dupin