Europe Freight Rates Continue to Fall as Carriers Abandon August 1 Increase, Look to August 15

Container freight rates on the Asia–Europe trade continued to trend downward during the first week of August. Carriers have dropped their planned August 1 rate increases and shifted their focus to FAK (Freight All Kinds) rates - published rates applicable to cargo falling within the scope of the relevant tariff terms - effective August 15.

Notably, CMA CGM has significantly lowered its published rates compared with those announced in mid-July, while MSC is maintaining a rate of USD 7,800/40ft to Northern Europe for the second half of August. According to The Loadstar, CMA CGM is quoting USD 6,200/40ft to Northern Europe, down from the USD 7,000/40ft it had previously announced for the mid-July period.

For Vietnamese shippers exporting to Europe, the development creates a notable window for negotiations over the next two weeks, as actual market quotations remain significantly below carriers’ published rates.

Key Takeaways

●    The Drewry WCI Shanghai–Rotterdam rate was flat at USD 4,653/40ft, while Shanghai–Genoa fell 2% to USD 5,506/40ft as of August 6. The Loadstar described this as the fourth consecutive week of declines on the Europe-bound trades.

●    Spot rates on the Asia–Europe trade in early August ranged between USD 4,000 and USD 5,000/40ft, according to Linerlytica, as cited by The Loadstar on August 7.

●    MSC published a FAK rate of USD 7,800/40ft to Northern Europe and USD 6,700/40ft to the Western Mediterranean, effective August 15–31, according to the carrier’s announcement dated July 30.

●    CMA CGM reduced its FAK rates on the Asia–Mediterranean trade for August 15–30 to USD 7,000–7,200/40ft, down by USD 800–1,400 from the rates published for mid-July, according to Container News on August 9. The USD 6,200/40ft rate to Northern Europe was separately reported by The Loadstar, citing Linerlytica.

●    Maersk confirmed that it would not implement the planned Peak Season Surcharge (PSS) on the Far East–Mediterranean trade from August 14. Earlier, the carrier had reduced its Asia–Europe and Mediterranean PSS to USD 500/40ft from August 3.

Europe-Bound Rates Continue to Fall While Transpacific Rates Rise

Spot rates on the Asia–Europe trade stood at USD 4,653/40ft for Shanghai–Rotterdam and USD 5,506/40ft for Shanghai–Genoa during the first week of August, according to Drewry on August 6.

While the two Europe-bound routes continued to weaken, Drewry’s composite WCI increased 1% over the same period to USD 4,297/40ft, ending three consecutive weeks of declines. The increase was driven mainly by the transpacific trade, where the August 1 GRI (General Rate Increase) was still holding, according to Drewry.

By contrast, on the Asia–Europe trade, Rotterdam was unchanged while Genoa declined 2% from the previous week.

The Loadstar reported on August 7 that this marked the fourth consecutive week of declines on the Europe-bound trades, as carriers successively cancelled or scaled back their plans to push rates higher.

The SCFI published on August 7, which reflects the prevailing rate levels quoted for the following week, also indicated that the downward trend had yet to bottom out. Shanghai–Northern Europe rates fell 2.1% to USD 4,934/40ft, while Shanghai–Mediterranean rates declined 3.4% to USD 5,730/40ft, according to SCFI data cited by The Loadstar.

The spread between carrier quotations is also relatively wide. An analyst at Linerlytica, quoted by The Loadstar, said:

“Asia–Europe carriers have failed to hold rates into August, with rates still trending lower. Average spot rates in early August continue to range widely between USD 4,000 and USD 5,000/40ft.”

The development indicates that the pressure to maintain existing freight-rate levels is currently greater than carriers’ ability to push rates higher, at least in the short term.

MSC and CMA CGM Cut Published FAK Rates for August 15: Expectations Have Been Revised Downward

The FAK rates taking effect on August 15 show that carriers have had to lower their expectations for the prevailing rate environment. CMA CGM has reduced its published rates by USD 800–1,400, depending on the route, compared with mid-July, while MSC is maintaining USD 7,800/40ft to Northern Europe, broadly in line with the USD 7,700/40ft it previously announced for the mid-July period.

MSC was the first carrier to publish its tariff formally and in detail. According to its July 30 announcement, the rate from Far East ports, including Southeast Asia and Vietnam, to Northern Europe is USD 7,800/40ft, equivalent to USD 5,100/20ft.

For other destinations, MSC published a rate of USD 6,700/40ft to the Western Mediterranean and Adriatic, and USD 6,900/40ft to the Black Sea.

The rates are effective from August 15 and will remain in force no later than August 31. They include the USD 271/TEU GFS fuel surcharge but exclude Terminal Handling Charges (THC) and carbon-related surcharges, including the USD 20/TEU CLS and USD 81/TEU CRS for cargo destined for Northern Europe.

For CMA CGM, Linerlytica, as cited by The Loadstar, reported a published FAK rate of USD 6,200/40ft to Northern Europe from August 15, compared with USD 7,000/40ft previously announced for the mid-July period. This represents a reduction of USD 800/40ft.

On the Mediterranean trades, more clearly sourced rate information is available. Container News reported on August 9 that CMA CGM would apply the following rates for August 15–30:

●    USD 7,000/40ft to the Western Mediterranean;

●    USD 7,100/40ft to the Adriatic and Eastern Mediterranean;

●    USD 7,200/40ft to the Black Sea.

These rates are approximately USD 800–1,400 lower than the tariffs published for the mid-July period.

Maersk Chooses to Withdraw the Surcharge Rather Than Push Rates Higher

Maersk has taken a different approach, opting not to raise its published freight rates but instead to withdraw the surcharge.

According to The Loadstar, the carrier confirmed that the planned PSS on the Far East–Mediterranean trade, scheduled to take effect on August 14, would not be implemented.

The move follows Maersk’s decision to cut its Asia–Europe and Mediterranean PSS from USD 1,000/40ft to USD 500/40ft, effective August 3, according to the carrier’s announcement cited by Container News on July 24.

Lars Jensen, CEO of Vespucci Maritime, told The Loadstar that Maersk’s decision suggests the market has “passed the peak of the high season.” A source cited by The Loadstar also said that under the current conditions, simply maintaining existing freight-rate levels “is already considered a win” for carriers.

Why Are the Published FAK Rates from August 15 Unlikely to Become the Actual Market Rate?

FAK (Freight All Kinds) is a published rate set by a carrier and generally applies to cargo falling within the scope and conditions of the relevant tariff. It serves as a reference price published by the carrier, but does not necessarily reflect the rate that shippers actually negotiate and pay in the market.

The gap became particularly evident during July.

When CMA CGM published a FAK rate of USD 7,000/40ft to Northern Europe and MSC announced USD 7,700/40ft for the mid-month period, actual market quotations subsequently fell below USD 5,000/40ft, according to Linerlytica.

In other words, published rates and actual transaction rates can diverge significantly when the market weakens. This is particularly important for shippers when assessing new FAK tariffs announced by carriers.

Three signals from the past week’s data suggest that the August 15 tariffs are entering the market with limited ability to establish a firm rate floor compared with the July period.

First, CMA CGM has reduced its published rates by USD 800–1,400, depending on the trade, compared with July. The decision to lower rates ahead of the new tariff taking effect suggests that the carrier has already adjusted its expectations in response to actual market conditions. MSC, meanwhile, is maintaining USD 7,800/40ft to Northern Europe, but only until August 31.

Second, Maersk has chosen to withdraw its PSS rather than continue pushing rates higher. This is a notable signal regarding carriers’ ability to sustain surcharges when demand is not strong enough to absorb further increases.
Third, the August 7 SCFI continued to show declines on both the Northern Europe and Mediterranean trades, immediately ahead of the new tariffs taking effect.

On the other hand, carriers still have several tools available to support freight-rate levels. Drewry recorded three blank sailings on the Asia–Europe trade during the week and another three for the following week, while forecasting that rates on the trade could stabilize in the coming week.

At the same time, the overall cost environment is not necessarily “cheap.” Tensions in the Strait of Hormuz have prompted some carriers to introduce Emergency Freight Surcharges (EFS) from August, according to Drewry, adding further cost pressure to affected trades.

Taking these factors together, Phaata assesses that the August 15 tariffs are more likely to slow the pace of rate declines than to establish a new market rate level. Actual rates during the second half of August will continue to depend on cargo demand, carriers’ ability to maintain capacity discipline and the extent of blank sailings.

Weekly developments on key trades are updated on Phaata’s logistics market platform, together with the VCFI for exports from Vietnam.

Recommendations for Importers and Exporters

1. For cargo moving within the next two weeks: Prioritize spot-rate quotations

For shipments that need to move in the short term, companies should proactively obtain quotations and compare options before August 15.

Actual market quotations of USD 4,000–5,000/40ft, according to Linerlytica as cited by The Loadstar, are approximately USD 1,200–3,800/40ft lower than the FAK rates published by carriers for the second half of August.

Securing space before the new tariff takes effect may therefore help companies reduce the risk of being charged the new published rates during the first days of the pricing period.

2. Use July market developments as a basis for negotiations

The gap between published rates and actual transaction prices in July provides useful leverage in negotiations.

When published rates to Northern Europe were around USD 7,000–7,700/40ft, while actual transaction rates fell below USD 5,000/40ft toward the end of the month, shippers have a reasonable basis for asking carriers or forwarders to clearly explain the actual rate being offered and the conditions attached to it.

For short-term contracts covering four to six weeks, companies may also consider including a rate-review clause if spot rates remain significantly below published rates after August 15.

3. Avoid rushing into long-term commitments based on published FAK rates

MSC’s tariff is valid only through August 31. This relatively short validity period suggests that the carrier has not yet committed to a specific rate environment beyond August.

For shipments that do not need to be fixed immediately, companies may therefore consider maintaining flexibility rather than locking in long-term rates based on the published FAK tariff.

4. Consider all surcharges when comparing rates

FAK is not the total transportation cost.

When comparing carriers or logistics providers, companies should account for THC at both ends, carbon-related surcharges such as CLS and CRS for cargo to Northern Europe, EFS where applicable, as well as other surcharges depending on the trade and transportation conditions.

In a market where published rates and actual transaction rates are significantly different, the all-in rate is the more appropriate basis for comparison.

Recommendations for Logistics Providers

1. The next two weeks are likely to be highly competitive on price

Market rates are currently showing a relatively wide range of around USD 4,000–5,000/40ft, according to Linerlytica. Forwarders with access to competitively priced vessel space may be able to create a significant pricing advantage over competitors quoting solely on the basis of published tariffs.

2. Quotations covering August 15 and beyond should include adjustment conditions

For quotations that remain valid after August 15, forwarders should clearly specify adjustment conditions related to new FAK rates, PSS or other carrier surcharges.

This can help limit the risk of committing to a fixed rate while carriers’ pricing policies continue to change rapidly.

3. Prepare two scenarios for customers

If the published rates taking effect on August 15 continue to fail to gain market acceptance, as happened in July, customers may continue to prioritize spot rates.

Conversely, if blank sailings increase and market rates begin to stabilize, as Drewry forecasts, logistics providers may consider encouraging customers to lock in part of their September requirements early.

4. Monitor CMA CGM’s official confirmation

The USD 6,200/40ft rate to Northern Europe currently comes from Linerlytica, as cited by The Loadstar. Logistics providers should therefore wait for CMA CGM’s official announcement before using this figure as a reference rate in customer quotations.

Frequently Asked Questions

What are current container freight rates to Europe?

According to Drewry on August 6, the spot rate from Shanghai to Rotterdam was USD 4,653/40ft, while Shanghai–Genoa stood at USD 5,506/40ft. Linerlytica, as cited by The Loadstar, reported actual market quotations in early August ranging from USD 4,000 to USD 5,000/40ft, depending on the carrier and trade.

What is FAK, and does it represent the actual freight rate?

FAK (Freight All Kinds) is a published carrier rate applicable to cargo falling within the scope and conditions of the tariff. It can serve as a reference rate, but does not necessarily reflect the rate a shipper actually negotiates and pays. In the current market, the gap between published FAK rates and actual transaction rates can reach several thousand dollars per 40ft container.

What are MSC and CMA CGM’s FAK rates from August 15?

MSC has published a rate of USD 7,800/40ft to Northern Europe and USD 6,700/40ft to the Western Mediterranean, effective August 15–31. For CMA CGM, Container News reported on August 9 that rates for the Mediterranean trades would range from USD 7,000 to USD 7,200/40ft, while the USD 6,200/40ft rate to Northern Europe was reported by The Loadstar, citing Linerlytica.

Should Vietnamese shippers book before or after August 15?

For cargo that needs to move soon, companies should proactively obtain spot quotations before August 15 while market rates remain significantly below published tariffs. After August 15, companies should closely monitor whether the new FAK rates can be sustained.

July’s developments show that published rates may not be absorbed by the market: when FAK rates to Northern Europe were around USD 7,000/40ft, actual transaction rates had fallen below USD 5,000/40ft by the end of the month.

Does FAK include all surcharges?

No. FAK is the carrier’s published freight rate within the applicable scope. When calculating the actual transportation cost, companies need to add charges such as THC, carbon-related surcharges, EFS, PSS and other applicable fees.

Therefore, when comparing carriers, companies should compare all-in rates rather than looking only at the published FAK rate.
 

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Source: Phaata -  Where Shippers & Logistics Providers Connect

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