Asia-US west coast spot rates at five-year high

Latest Shanghai Containerised Freight Index shows freight rates on the transpacific trade lane at their highest level since early 2013, as President Trump’s tariffs fail to put a dampener on demand and capacity restrictions ensure vessel utilisation remains high.

News ID: 80238

Date: 14 October 2018 - 14:15

Spot rates on the Asia-US west coast trade surge to $2,503 per feu as rates to the US east coast from Asia track 50% above last year, but rate rot prolongs for Asia-Europe carriers.

SPOT freight rates on the Asia-US west coast trade have surged to the highest level in more than five years, as rate momentum continues despite a further round of trade tariffs on Chinese goods by the US.

The latest Shanghai Containerised Freight Index, published by the Shanghai Shipping Exchange forecasting rates for the coming week, shows rates to the US west coast from Asia rising 7.3% on last week to $2,503 per loaded 40 ft box, representing its highest value since early 2013.

Whereas those to the US east coast from Asia stayed largely unmoved, falling by a marginal 0.5% to $3,304 per feu, spot rates are still tracking nearly 50% higher than this time last year.

Last month, the US intensified its trade war with China imposing a new set of import tariffs of $200bn on Chinese goods, meaning that nearly half of all goods entering the country are now subject to these levies.

The introduction of a third set of tariffs in the space of the year led to concerns that the strong trade sentiment on the transpacific in 2018 would be dampened.

The stagnation of spot rates shown by the Drewry-assessed World Container Index for the Los Angeles-Shanghai trade earlier this week also suggested that analysts’ fears of downward rate pressure had already took hold, as the market readjusts to the frontloading of cargoes before tariffs kicked-in.

However, it appears that shippers have remained undeterred by tariffs, backed-up by reports of strong volumes at US Pacific ports at the start of October carrying over from last month.

US box imports show no sign of slowing

Early reports of front-loading of cargoes and diminishing rates on the transpacific appear to be misguided as strong volumes are now predicted to continue

Earlier this week, the National Retail Federation and Hackett Associates also revealed in its monthly Global Port Tracker report that it is expecting US box imports to climb 4.3% in October compared with last year.

Sustained demand growth has also coincided with several void services introduced by carriers at the tail end of the peak season, following restraint shown by carriers from deploying more capacity during the summer. This has ensured utilisation levels have remained high.

The same cannot be said for the second largest intercontinental boxship trade Asia-Europe, where spot rates continue to disappoint.

This week’s SCFI shows further rate erosion, with prices per teu on the Asia-northern Europe and Asia-Mediterranean trades falling 0.5% to $731 and 2.1% to $751.

Earlier this week, analysts Alphaliner noted how load factors om the Asia-Europe trade had dropped below 90% in September in the absence of a traditional cargo rush before last week’s Golden Week holidays in China.

The worry for Asia-Europe carriers will be expectations for further downward rates pressure in the coming weeks as the winter slack season takes hold.