The World Container Index’s Shanghai-Rotterdam freight rate assessment increased $1,403 to US$ 2,498 per 40ft box, today, more than doubling spot pricing following several months of dramatic declines.

The weekly World Container Index assessed by Drewry, which captures freight rates with a contract validity of up to one month, confirmed today that the price increases of $750-$1,000 per teu announced by container shipping lines from 1st November were largely accepted by the market.

“The recovery in pricing comes at a critical time for ocean carriers, midway through 4th quarter negotiations for 2014 contract rates,” commented Richard Heath, director of the World Container Index. “Carriers will attempt to use the rally in spot rates as leverage in contract negotiations with shippers.”

The recent surge in rates follows a period of tumbling pricing in which the World Container Index’s Shanghai-Rotterdam freight rate assessment had fallen over 55% since it last peaked as recently as early August.

Martin Dixon, research manager freight rate benchmarking at Drewry, added: “The sustainability of current rate levels depends on what steps carriers take to limit capacity hereon. With many more ultra large container vessels (ULCCs) due to enter service, Drewry warns that a reliance on skipped sailings alone will not prevent rate erosion.”

World Container Index Shanghai-Rotterdam Benchmark (US$/40ft)

Drewry stressed that week-to-week increases in rates are less significant than how long the increase holds for.

Year to date average rates for the Asia to Europe trade are still some way below the average for 2012. Although this week’s GRI has been broadly successful, it has not proven sufficient to make up for the full scale of rate erosion witnessed over the past three months (see chart).

Drewry urges shippers to consider adopting index-linking as a mechanism to avoid contract default in the current environment of major price volatility.