July 28, 2020
North America Container Imports From Europe Slow As Capacity Tightens
Container freight rates from Europe to North America have fallen 15 percent in the past five weeks as carriers struggle to match capacity to the lower volume being booked by cautious shippers, according to forwarders on the trade.
The spot rate from Rotterdam to New York on July 23 was $2,213 per FEU, down $364 per FEU from mid-June and 7 percent year over year, after reaching a 2020 high of $2,592 per FEU on May 14, according to Drewry’s World Container Index (WCI). Last year, the WCI westbound trans-Atlantic rate never exceeded $2,400 per FEU.
The trans-Atlantic trade is dominated by automotive goods, parts, and machinery, especially on the westbound headhaul routes, with the “peak season” traditionally beginning at the end of July. However, lockdowns aimed at slowing the spread of COVID-19 in the second quarter and rising infection rates across the US have deeply impacted US demand for imports from Europe.
“The peak is definitely not coming, and we are hoping for a rush before Christmas, but our customers are being very cautious,” said Helge Neumann-Lezius, the Europe, Middle East, and Africa vice president of product and capacity management for DHL Global Forwarding.
“All production in Europe is at a low level at the moment, so volumes that are usually strong during the year are still down,” Neumann-Lezius explained. “We are seeing some shippers have orders to replenish existing products, but new orders and new production is still limited. We are expecting to run with a low-volume second half of the year.”
The trans-Atlantic operations manager for a Germany-based forwarder, who asked not to be identified, said shipment volume and shipment sizes were both shrinking, with a significant increase in demand for consolidation of cargo into less-than-container-loads (LCL).
“Customers are starting to come back after the coronavirus, but only with small orders. We are seeing 10 percent fewer orders but 50 percent less volume. For instance, before COVID-19 on one of our busiest routes from Europe to the US East Coast, we regularly had 200 consignments consolidated in 18 FEU per week. Last week, we had 180 consignments that only loaded nine containers.”
The forwarders also did not report an increase in front-loading to move cargo ahead of potential new US tariffs on a range of European-made goods. The US Trade Representative has just completed a call for public comment on new tariffs on $3.1 billion of goods from the UK, France, Germany, and Spain.