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Asia-Europe ocean spot split nears record level

The pricing gap between Asia-North Europe and Asia-Mediterranean container services has widened to near-record levels, as disruption linked to the Strait of Hormuz continues to distort freight markets. According to analysis by Sea-Intelligence of Drewry's World Container Index (WCI) spot rate data since 2012, the arbitrage spread was "rapidly approaching a situation we have not seen before". The spread between Asia-North Europe and Asia-Mediterranean spot rates is typically negative because freight rates into the Med are usually higher, despite the shorter sailing distance. Sea-Intelligence explained that this reflected vessel deployment patterns, with larger ships typically serving North Europe, resulting in lower unit costs than services into the south. However, the consultancy said the relationship had changed markedly since the pandemic, with the spread becoming both wider and significantly more volatile. According to the latest WCI data, the differential has now reached -$1,678 per 40ft, a split exceeded only during an eight-week period at the height of the post-pandemic supply chain disruption in 2022. "The relative imbalance between Mediterranean and North Europe is therefore almost at a historical record high," Sea-Intelligence said. "A key element influencing this development is the crisis in the Strait of Hormuz, which has prompted some cargo to detour via the Mediterranean and down into the Red Sea from the north. This de-facto increases the demand pressure on the Mediterranean services," it added. By contrast, Sea-Intelligence found that the pricing spread between Asia and the US east and west coasts, while increasing, remained "unremarkable" in the context of the past 14 years. "This lends further credence to the notion that the Europe spread is driven by a spillover effect from the Hormuz crisis, as this effect would not impact the spread in the transpacific." The analyst also compared Asia-North Europe with Asia-US west coast spot rates, finding that the gap, relatively stable before the pandemic, had become "much more volatile" - even "erratic". When the spread turns negative, it indicates higher rates on the transpacific than on Asia-Europe. Sea-Intelligence noted that a similar spike occurred in June last year, after the sudden removal of tariffs of more than 100% on China-US trade triggered a short-lived surge in demand. "We are now seeing a new sharp spike. Not quite to 2025 levels yet, but resembling it. This is potentially an indication of history repeating itself, with a sharp spike in the transpacific driving the arbitrage premium to a very high level, but this would likely also be normalised soon as also seen in 2025."

The EU's €3 customs duty? Shein and Temu already built the bypass

https://www.dreamstime.com/royalty-free-stock-images-detour-image1539139 Key takeaway: Brussels wanted to curb the flood of cheap Chinese parcels. The Chinese platforms responded by moving their inventory inside the EU, and the unintended consequence may be that they emerge stronger, not weaker. On July 1, the European Union abolished the €150 customs duty exemption that had allowed low-value parcels to cross its borders duty-free, replacing it with a flat €3 charge per tariff classification line, meaning each distinct product category in a parcel is charged separately. ...

Korea Fair Trade Commission probes container 'sales cartel'

The Korea Fair Trade Commission has also launched an investigation into China International Marine Containers (CIMC), Shanghai Universal Logistics Equipment (also known as Dongfang International Container), Singamas and CXIC Group Containers for the same cartel-like behaviour alleged by the US Department of Justice (DoJ). Between 2019 and 2024, the four manufacturers, which produce 95% of the world's container supply, are said to have colluded to limit output to raise prices. As the shortage of containers was exacerbated during Covid, prices rocketed, bringing the manufacturers record profits. The KFTC wants to see if their actions led South Korean shipping lines to pay "unreasonably inflated prices" for containers - estimating they could have paid as much as $35m during the period. Before the alleged collusion, in 2019, the price of a 20ft container was around $1,750; this more than doubled, to $3,690 in 2021; while the price of a 40ft box also more than doubled, from $2,800 to $5,940. Since then, prices have corrected, but remain over $2,000 for a 20ft container. The KFTC is empowered to investigate overseas cartel activities and impose fines if South Korean companies are impacted. It plans to work with foreign competition authorities, such as the DoJ, during the probe. South Korea has 13 container lines, including HMM, KMTC Line, and SM Line. For the KFTC to fine Chinese companies, it needs to calculate the related sales to South Korean shipping companies. For collusion, fines of up to 20% of the related sales can be imposed. If the KFTC imposes fines on the container makers, the South Korean shipping companies could sue them for damages, as US companies CA Spalding and Atlantic Container have done. And the KFTC's move means antitrust regulators from more countries are expected to initiate investigations. The container manufacturers did not respond to The Loadstar's request for comment.