Shipping firms are finding it difficult to sustain elevated tariffs

Shipping companies are struggling to maintain tariff increases
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The shipping companies’ general rate increases (GRIs) from Asia to Europe have failed to achieve their projected demand, with Drewry’s WCI Asia-North Europe component dropping 4% this week to an average of $1,227 per 40 feet and 43% lower than last year. The bearish trend in prices to northern Europe and the Mediterranean was reported by the Ningbo Containerized Freight Index, attributing the price drops to offered discounts by carriers and NVOCC co-shippers. Carriers’ initial annual tariff offers have also raised concerns as their range of $1,050 to $1,300 per 40 feet indicates potential resistance of the new tariff levels.

In response to the market conditions, airlines announced new FAK tariffs for Western Mediterranean ports of $2,000 per 40 feet effective December 1, while Maersk has offered deep discounts through their online platform Maersk Spot. Despite the downward spiral of spot rates from Asia to the US East Coast, the rates on the Asia-US West Coast trans-Pacific route have been more resilient, with Maersk using its online platform to offer deep discounts. However, the introduction of additional US West Coast capacity is expected to depress prices on the route. The transatlantic market’s spot prices have remained flat with the XSI average at $1,293 per 40 feet this week. These prices are approximately 80% lower than a year ago and well below carrier costs.

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