Drewry WCI Up 2% to $4,585: Shanghai Waits Drop to 38 Hours, Asia-Europe Blanks Double to 8

The Analysis

Drewry assessed the World Container Index at $4,585 per 40ft container on 22 October, up 2% on the week. Four of the eight lanes in that basket printed publicly, and no two of them moved alike: Shanghai-Rotterdam $3,632 (+3%), Shanghai-Genoa $4,152 (+5%), Shanghai-Los Angeles $8,007 (+2%), Shanghai-New York $10,166 (+1%).

Two numbers lower down in the same release do more work than the index itself. Asia-Europe blank sailings climb to eight next week from two this week, while the Transpacific halves to two from six. Shanghai berth waiting fell to 38 hours in Week 42 from 97 hours in Week 38.

We start with the arithmetic rather than the adjectives, because this week's money moved in the arithmetic. Give me the number, not the feeling.

The hard numbers, in one place. Composite index $4,585 per 40ft on 22 October, up 2% on the previous print, which back-solves to $4,495.10 and an absolute move of $89.90. Shanghai-Rotterdam $3,632, up 3%, back-solving to $3,526.21 and a move of $105.79. Shanghai-Genoa $4,152, up 5%, back-solving to $3,954.29 and a move of $197.71. Shanghai-Los Angeles $8,007, up 2%, back-solving to $7,850.00 and a move of $157.00. Shanghai-New York $10,166, up 1%, back-solving to $10,065.35 and a move of $100.65. Drewry rounds the percentages it publishes, so treat every back-solved figure as plus or minus a couple of dollars and nothing tighter than that.

Add the four headhaul moves together and you get $561.15, an average of $140.29 per lane. The composite moved $89.90. The gap between the average lane and the basket is $50.39, which is 56.1% of the composite's own move. That gap is the shape of the whole problem. Eight lanes go into the index, four of them are the Shanghai headhauls everybody quotes, and the other four are returns and cross-trades that never make the headline: boxes moving back east from Rotterdam and Los Angeles at a fraction of the headhaul rate, and two transatlantic legs that have nothing to do with your cargo out of Shanghai. Whatever those four did this week, they did not do it at $8,007.

Why now. Late October is the last clean window before two things land at once: the year-end restock arriving on European shelves in late November, and contract administrators building the January reset base. Any carrier that wants a bigger number sitting in a January formula needs the weekly prints to hold up between now and the end of November. That is what a blanked sailing is for. Announcing eight Asia-Europe blanks next week against two this week is not a capacity decision responding to demand, it is a price decision responding to a calendar. Four times the blankings, one week before the window closes.

Notice where the blanks went and where they did not. Asia-Europe goes from two to eight. The Transpacific goes from six to two, which is more sailings, not fewer. Carriers do not blank at random, they blank where the revenue given up per sailing is smallest. A withdrawn Asia-Europe sailing surrenders roughly $3,632 of freight per loaded box. A withdrawn Transpacific sailing surrenders $8,007 on the Los Angeles lane and $10,166 on the New York lane. Same hull, same fuel, same canal slot, between 2.2 and 2.8 times the money walked away from. If you had to take six sailings out of your own network this week you would take them out of the cheap lane as well. What that tells an exporter is the uncomfortable part: the Transpacific got more sailings restored and still only printed +2% and +1%, while the Asia-Europe print of +3% and +5% was bought, in the plain sense that somebody paid for it in cancelled tonnage.

Now the 97 hours. Shanghai berth waiting fell from 97 hours in Week 38 to 38 hours in Week 42, a 59-hour improvement in four weeks, and the trade press has filed it under congestion relief. It is not relief, it is released capacity, and the arithmetic is not hard. Fifty-nine hours is 2.46 days. Assume a Far East-Europe round trip of 77 days on a weekly service, which needs 11 vessels; take 2.46 days out of the rotation and the same weekly service needs 74.54 days and 10.65 vessels. That is 0.35 of a vessel released per service.

Assume 20 of the mainline strings call Shanghai and you have roughly 7 spare vessels, about 98,000 TEU of nominal capacity at 14,000 TEU a ship. Convert it into the unit that actually moves rates, which is weekly slot supply: one 14,000 TEU vessel on an 11-week rotation contributes 1,273 TEU a week, so seven of them add roughly 8,909 TEU of weekly supply. Those are my assumptions, not Drewry's. Substitute your own rotations before you quote any of it across a table.

Hold that 8,909 TEU a week against the blankings. Eight blanks next week against two is six additional withdrawals. At 14,000 TEU nominal and 85% utilisation, both my assumptions and both worth checking against your own load factors, one withdrawn sailing is about 11,900 TEU. Six of them is 71,400 TEU out of a single week. That is roughly eight times what Shanghai's berth improvement released into the weekly pool. So do not let anyone sell you the blankings as a congestion story. At most about an eighth of them is. The rest is capacity returning from somewhere else, and the single largest source of it this quarter is the Red Sea, where the round trip got shorter for most of the trade. That is a separate piece of arithmetic and it belongs in a separate column; here we only need the conclusion, which is that the freed tonnage exists and blankings are how it gets absorbed.

Who pays, and how much. Three populations, three exposures. Shippers on fixed annual contracts with no index clause see nothing this week and will meet this print at the January or April reset instead, so their exposure is timing rather than money today. Shippers buying spot on the Transpacific pay the $157.00 and the $100.65 directly, this week, on the next booking they place. And shippers on index-linked contracts pay whatever the linkage says, which is the clause nobody re-reads before signing. How the buyer then books that against landed cost is Grace Yang's side of the house, and she will tell you it belongs in the cost structure and not in the freight budget; my half of it is that the linkage is charging you for a basket your cargo does not sail in.

Here is the piece the headline skips, and it is the reason I opened the calculator at all. The composite is a basket, your cargo is a lane. When a contract says the rate moves with the World Container Index, it moves with eight lanes combined in weights that Drewry does not publish in the weekly release. I cannot reproduce $4,585 from the four prints we were given plus four we were not given, and neither can your contract administrator, and neither can the carrier's pricing desk.

That is not a complaint about methodology, it is a fact about what you signed: you agreed to a number you cannot audit, and this week it moved differently from every lane you actually ship on. Work the mismatch. Take a contract that passes through 100% of the composite movement, with the base rate aligned to the current spot print on your lane. Composite up 2% means you pay 2% more. On Rotterdam your lane moved 3% and you pay 2%, so you are $36.32 a box better off than the spot market, on a $3,632 base.

On Genoa your lane moved 5% and you pay 2%, so you are $124.56 a box better off, on a $4,152 base. On Los Angeles your lane moved 2% and you pay 2%, and exactly nothing happens. On New York your lane moved 1% and you pay 2%, so you hand over $101.66 a box more than the lane you ship on actually moved, on a $10,166 base.

Same index, same week, same clause, four different outcomes, and the spread between the best and the worst of them is $226.22 a box. Multiply by your own volume. Assume 30 boxes a month into New York and a quarterly reset: 30 times $101.66 times four is $12,199.20 a year, paid for a lane move that did not happen on your lane. Assume 40 boxes a month into Rotterdam on the same quarterly reset: 40 times $36.32 times four is $5,811.20 a year in your favour, and you probably never noticed it. If your reset is monthly rather than quarterly, multiply both by three again. That is the whole argument for reading the clause instead of the headline.

There are three ways to close that gap on paper, and all three are cheap. Begin by asking for the linkage reference to be the lane component instead of the composite, if your carrier will price it that way; Drewry publishes the lane prints and both sides can then read the same number. Next, if the composite has to stay, put a corridor on it: cap the pass-through at your lane's own printed move plus one percentage point, which caps the New York overpay at $50.83 a box instead of $101.66. After that, cut the linkage ratio. At 60% pass-through instead of 100%, the New York overpay falls to $61.00 a box, and every 10 percentage points you shave off the ratio is worth $10.17 a box to that shipper at this week's levels. None of these three requires the market to cooperate. They require a clause, and a clause is renegotiable in November in a way that a January rate is not.

A related check for anyone shipping less than a full box. If your forwarder absorbs a container-level index move and recharges it across a consolidated box, the number that decides your bill is the denominator. Take a 20ft consolidation carrying 24 revenue tons. The $105.79 Rotterdam increase spread over 24 revenue tons is $4.41 a ton; spread instead over 24 cubic metres of a different cargo it is $4.41 a cubic metre, and those are not the same money at all. Ask for the denominator in writing before the next consolidation sails, and ask whether the index move is passed through at the container level or at the house bill of lading level, because the two round differently and the difference compounds on every week the index moves. This is where money leaks quietly for years, and checking it costs an email.

One more dissection while we are inside the numbers. Genoa printed +5%, the largest percentage of the four, on the smaller absolute base of the Europe pair. Shanghai-Genoa at $4,152 sits 14.3% above Shanghai-Rotterdam at $3,632, a gap of $520, and that gap is the Mediterranean premium: fewer direct strings, longer feeder legs into the western Mediterranean, and a thinner set of weekly departures to sample from. Thin samples produce dramatic percentages. When the lane with the fewest weekly sailings produces the biggest move in the release, read the percentage as a signal about sample size before you read it as a signal about your freight bill. If your cargo discharges at Genoa, ask for the underlying print before you accept a 5% escalation, and ask separately what the feeder leg inside the Mediterranean is doing to the all-in figure, because the index stops at the base port and your invoice does not.

The Transpacific pair deserves the same treatment. New York at $10,166 is $2,159 above Los Angeles at $8,007, a premium of 26.96%, and this week that premium narrowed by $56.35, because Los Angeles gained $157.00 while New York gained only $100.65. The all-water route through Panama carries the canal slot and the longer transit. If you have been routing New York cargo through the West Coast and rail to avoid that premium, the $2,159 is the number that decides whether the intermodal move still pays, and it has been shrinking. Recompute it this month. That comparison is done in days and dollars per box, and it has nothing to do with what the composite did on Thursday.

Timing, then. The spot print bites on the next booking you place, and bookings placed this week sail inside seven to fourteen days. The blankings bite on the week of 27 October onward, which means cargo that would have sailed in that window either rolls two weeks or pays for space on a sailing that was not withdrawn. Rolling a shipment two weeks into a late-November European arrival is a different animal from paying $105.79 more a box: one is a stockout conversation with your customer, the other is a line in your margin.

The index-linked pass-through bites at your reset, quarterly or monthly depending on the paper, and the January reset base is built from exactly the prints between now and late November. That gives you about five weekly prints to influence and about one week of lead time on the blankings. Spend the lead time on the blankings and the five weeks on the clause. Shippers who wait for the January invitation to renegotiate have already lost the only argument they had, because by then the base is printed and the clause is a formality.

What would make me wrong. If the eight blank sailings do not execute, and announced blanks are quietly reinstated more often than carriers admit because the cargo shows up and the space gets sold, then the Asia-Europe print was managed rather than earned and it rolls over inside two weeks. Three tripwires, and the conclusion flips on any one of them. Rotterdam below $3,632 on the next print means the +3% was the blankings. Fewer than six of the eight announced blanks actually executed by midweek means the same thing. And a composite that fails to hold $4,585 for two consecutive weeks means the January base is being set lower than Thursday's headline implies, in which case locking a full pass-through now costs you in both directions. On the other side, if Rotterdam prints above $3,800 and the eight blanks hold, the +3% has become the floor for the reset and the shippers who renegotiated the clause in November will be glad they did it in November.

Take a spot shipper instead, because that is what most readers of this column are. Assume 20 40ft boxes a month Shanghai to Rotterdam at the printed $3,632, and assume the +3% holds into next week. Twenty boxes at the $105.79 increase is $2,115.80 more next month than this month. If those 20 boxes carry $800,000 of goods, that is 0.26% of cargo value, survivable, and it should not trigger a sourcing conversation. If they carry $200,000 of goods, the low value-density end of the trade where furniture, ceramics and basic building material live, the same $2,115.80 is 1.06% of cargo value, and on a 12% gross margin that is a real decision. One index print, two completely different weeks, and the difference between them has nothing to do with shipping.

The number nobody quoted from the release: two container ships entered the Persian Gulf in Week 42 against five the week before. Three fewer hulls on the Middle East trades inside a single week. If you ship into the Gulf, the read is not about rate, it is about space. Fewer sailings into a region that already runs on thin frequency means booking further ahead than you book Europe, and it means a premium for guaranteed loading is worth asking about now rather than in three weeks when the space has already gone.

So the week's work, in the order I would do it. Open the contract and find the index clause before you open the freight budget; if it says the composite and does not name a lane, you are running either the New York arithmetic or the Rotterdam arithmetic and you should know which one. Get the actual lane print from Drewry for your lane, not the composite, and set it next to your base rate. Recompute your roll-over exposure against the eight blanks: every booking you have placed for a sailing in the week beginning 27 October needs a confirmed vessel name today, and a booking number is not a vessel name. Then decide the pass-through question this month, because the clause is cheap in November and the rate is not cheap in January.

Carriers announcing four times the blankings in the week they want a higher print is not a mystery, it is a calendar. The index went up $89.90. Your lane went up $105.79, or $197.71, or $100.65, or not at all. Four different weeks are hiding inside that one headline, and only one of them is yours. Find out which one before the next print on Thursday, because the print arrives whether you have read the clause or not, and it arrives with your money attached.

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— By Vivian Zhao