CONTAINER QUARTERLY: Bearish sentiment into New Year amid volatile Q4

The European container market saw significant fluctuations during fourth-quarter 2024, driven by aggressive carrier strategies, market fundamentals, and seasonal demand patterns. The quarter was characterized by initial bearish trends in October, followed by a series of rate increases in November, and a steady market in December.

The quarter began with a bearish sentiment in the European container markets. The Platts Container Rate 1 for westbound shipments from North Asia to North Europe started at $3,000/FEU, but faced a decline to $2,900/FEU by Oct. 11. This downward trend was countered by aggressive blank sailing strategies adopted by carriers, which led to a rebound in rates to $4,000/FEU by Oct. 31. Market sources indicated that liner operators cut around 35% of capacity on Asia-Europe routes.

"Carriers employed blank sailings because rates have been dumping week on week. They're pulling capacity to clog up supply and this will eventually impact demand, and as a result, freight rates," a forwarder source said.

Ex-Asia rates into the Mediterranean tracked this trend, starting at $3,400/FEU and falling to $3,200/FEU before rising to $4,200/FEU by the end of the month. The limited services on Asia-Europe routes resulted in high vessel utilization rates, nearing 95% for bookings in late October and early November.

November opened with continued bearishness, but the introduction of general rate increases helped stabilize the market. The PCR 1 began the month at $4,000/FEU and saw a gradual increase, reaching $5,200/FEU by Nov. 29. Carriers faced pressure to manage rates effectively, as some clients were willing to cancel bookings for more competitive rates.

Ex-Asia rates into the Mediterranean also saw a rise, starting at $4,200/FEU and climbing to $5,400/FEU by month-end. Despite the upward movement in rates, scepticism remained regarding the sustainability of these increases, as many participants felt the market fundamentals did not support such a rise.

Long-term deals tied up toward end of the year; spot rates to be impacted

The box market in Europe displayed steadiness in December, despite an early decline in spot rates. The PCR 1 fell to $5,000/FEU by Dec. 4, reflecting a $1,000 increase from the previous month. Rates into the Mediterranean also saw a slight decline but remained firm, settling at $5,300/FEU by Dec. 13.

As shippers typically finalize long-term deals in December, there was a noticeable shift toward spot bookings due to elevated spot market conditions. Market sources indicated that carriers were delaying long-term negotiations to maximize bookings on the freight all kinds market. By the end of the month, some carriers reported finalizing long-term contracts, while others remained cautious, leading to a bearish outlook for the upcoming year.

"There are already some rollovers happening due to the blank sailings, and if we book more, then we will start facing issues," a forwarder source said. "The carriers are delaying long-term negotiations to ensure more bookings on the FAK market."

The Q4 2024 European container market was marked by volatility, with carriers employing strategic measures to manage capacity and rates in response to fluctuating demand. Moving into 2025, the market participants will need to navigate the implications of these trends, particularly regarding long-term contracts and the sustainability of spot rate increases.

Platts is part of S&P Global Commodity Insights.