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GRI Deadline Approach Forcing Asia-Europe Carriers to Reduce Rates

Starting from the year, carrier companies are facing great devaluation in prices. This week, it is even more destruction seen in price as GRI deadline is going to approach soon. Monthly report says that container lines GRIs are destroying faster this year. It came to know that freight rates are decreasing day by day in between Asia and Europe. More decrease is seen this week due to great discounts offered by ocean carriers. As general rate increase (GRI) deadline is ahead i.e., 1st September, heavy discount offered by ocean carriers. From 1st September, the general rate will increase from 500 dollars to 1,100 dollars per teu. A great declination seen in North European rates showed its impact on Asia-Europe wings of Shanghai Containerized Freight Index (SCFI), due to which it degraded into a great loss. It is revealed from the source that rates were declined by 171 dollars per teu in North Europe recording final price as 469 dollars. Consequently, Asia-Mediterranean rates declined by 212 dollars and final price recorded as 449 dollars per teu.

From the records, it is clear that carriers offered their services at very low prices this week, due to the short validity period of GRI. The sales executives of shipping carriers said that they are about to apply new GRIs from the first or second week of September. They are predicting these GRIs would succeed in lifting their profits. FIS, which is a London container broker, was expecting at least a partial success from September GRIs. Although great discounts offered in last two months for profit increase, they may not hold constant for the long length of time. Due to GRI fading, a fast decline is seen in SCFI. Moreover, average weekly decline recorded in Asia-North Europe spot rate is 83 dollars per teu with standing final price as 107 dollars per teu. This decline percentage is recorded compared to last year records. In 2013, 65 dollars per teu decline is recorded for the same period.

It is said by Alphaliner that after continuous nine attempts of carriers to raise prices on trade this year, shippers are trying to be more savvy by holding bookings till GRI breaks and are aware about fact that rates will fall in the upcoming month. By latest records, it is clear that strategy made by shippers and forwarders is ultimate failure so far this year as carriers holding GRI gains and showed their acceptance for great discount rates in the upcoming last two weeks of the month. It is an expectation that substantial rate increase for Asia-Europe carriers would last only for September month and demand may lack during the month of October especially after ‘Golden Week’ holiday in China. APL and MOL have lost their ranks with 500 dollars per teu as a GRIs proposal from 1st September. Whereas, competitors are seeking up to 1,000 dollars hikes. Starting from Asia to Europe, spot rates are under pressure as SCFI recorded rates of Pacific Coast with a downfall of 134 dollars standing at a price of 1,585 dollars per 40 feet. Whereas, the east coast is facing 313 dollars downfall standing at 2,846 dollars per 40 feet.

Source From: http://theloadstar.co.uk/asia-europe-carriers-forced-to-discount-rates-as-new-gri-deadline-approaches/