CONTAINER PREMIUMS: Premium bookings 'disappearing' amid weak demand: sources

All-inclusive freight bookings into North America remained at the Freight-All-Kinds, or FAK, level during the week ended June 3, as demand had yet to recover for ex-Asian cargoes, and vessel capacity remained healthy.

Cargo owners have reported a much easier time in securing a booking at published market rates, as tonnage outside of Asian loading ports balloons.

"Premiums have gone away; everything is moving on FAK," a freight forwarder said. "[Expedited] services still exist, but the premiums have disappeared."

During the week ended June 3, S&P Global Commodity Insights heard most bookings in line with market rates, although some shippers found a lower floor, when opting for charter carriers. One freight forwarder was heard offering a premium of just $300 for a faster transit time.

Most sources expect rates to remain under pressure even as Shanghai lockdown restrictions are lifted, as production facilities take time to ramp up. However, as volumes are expected to pick up from July onwards, indications suggest that all-inclusive rates with guaranteed loading and equipment allocation could return to a premium well above FAK levels.

Southeast Asia surplus capacity wipes out premiums

All-inclusive booking rates from key Southeast Asian ports held firm during the week to June 3 following weeks of downside. However, with surplus capacity all but wiping premium prices out of the market over the last few weeks, spot deals continue to be negotiated around FAK levels, sources said.

From Singapore, a key transshipment port in the region, all-in booking rates to ports on the US Pacific coast were heard unchanged at $11,000/FEU and $12,000/FEU to the Atlantic coast.

"There has been no movement in the market," a source based in Singapore said, adding that all-inclusive prices haven't reacted yet to the reopening of Shanghai. "The extended capacity from this region will fall off, but not abruptly. The reopening will be gradual, and the real impact will be witnessed week on week into July and August when it will also clash with the peak season rush."

While most spot bookings continued to be closer to FAK levels, S&P Global Commodity Insights heard a solitary mention of premium rates returning to peak season 2021 values during the week.

"At present, if you are looking to make a booking for five boxes, the liners will decide to book three boxes under the spot, FAK or contracted value, and for the remaining two boxes charge heavy premiums," a freight forwarder based in Indonesia said, adding that those premium booking prices can be as high as $19,500/FEU to the US West Coast and $25,235/FEU to the US Atlantic Coast.