North Europe to Far East spot rates now below pre-pandemic levels, as backhaul follows fronthaul fall

The latest ocean freight rates data from Oslo-based Xeneta shows that backhaul spot rates are now firmly following the fronthaul trend, with significant drops on key trades. This is exemplified by the North Europe to Far East container corridor, where rates are now 6.8% below the pre-pandemic figures of January 2020.

Protracted decline

“The fronthaul developments have captured most of the press, with spot rates falling away dramatically since the summertime,” comments Peter Sand, Xeneta’s Chief Analyst. “However, in some cases, backhaul rates have seen equally large drops and, what’s more, those drops have been more protracted.”

Here Sand points to the North Europe – Far East route again, where the negative development has been “locked in” since May 2021. The average rate for a standard FEU has now fallen to USD 820, a fall of more than USD 1 000 per FEU (down 56%) over the last year and a half.

Mixed fortunes

“This is now one of the first trades back at pre-COVID levels,” he notes, “but we don’t expect it to be the last. That said, other trades are currently showing greater resilience, and some are strongly outperforming their fronthaul counterparts. The US West Coast to Far East is one such example.”

Sand says Xeneta’s crowd-sourced, real-time data shows that prices on this trade are now down to USD 1 100 per FEU, but adds that the decline has been slower and less pronounced than the fronthaul collapse:

“The fronthaul saw the fastest and deepest fall in spot rates on any major corridor, yet the backhaul, despite the decline, remains up by almost 50% against January 2020.”

Tables have turned

He continues: “A lack of equipment and capacity saw US exporters losing out when the market was at its peak, with many carriers simply refusing to carry their goods, instead opting to rush containers back across the Pacific for the higher spot rates. Well, the tables have now turned and carriers are desperate for volumes in a softening market. This leads shippers to a happier situation of predictably securing volumes at better value prices.”

Of the other main trades, Xeneta’s data shows the backhaul spot rates on the increasingly popular US East Coast to North Europe route have fallen faster than on the fronthaul. They are now down from their August peak, currently sitting at USD 750. Market demand here has propped up fronthaul rates, but, with added capacity and weakening fundamentals, these are now beginning to follow the wider, negative spot rate trend.