The 90-day reduction in tariffs on Chinese imports have sent bookings out of the country soaring almost immediately—and ocean spot freight rates are following suit.
Numerous indices tracking rates on the trans-Pacific trade lane are seeing abrupt spikes in the cost to move cargo out of China toward to the U.S.
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The Shanghai Containerized Freight Index (SCFI) released Friday said deliveries from Shanghai to U.S. West Coast ports soared 32 percent from the week prior to an index rate of $3,091 per 40-foot container. The Shanghai-to-U.S. East Coast route saw a healthy 22 percent week-over-week jump to $4,069.
Drewry’s World Container Index (WCI) saw weekly Shanghai-to-New York sailings take the highest growth rate at 19 percent to $4,350 per 40-foot container (FEU), while trans-Pacific routes reaching Los Angeles shot up 16 percent to $3,136 on average.
For Drewry, both routes buoyed the total WCI composite across eight major East-West trade lanes, which increased 8 percent from the week prior, to $2,233 per container.
Xeneta’s newest data released Friday had Far East-to-U.S. West Coast average rates reaching $2,722 per FEU, with average East Coast-bound rates at $3,883.
“There is no time to waste for these shippers and the rush of cargo will put upward pressure on spot rates on trans-Pacific trades,” said Peter Sand, chief analyst at Xeneta, in a weekly update. “Spot rates will peak and then flatten as carriers redeploy capacity to match demand, then rates will begin to slide again just as we saw in Q1. This is expected to happen over the next two to four weeks.”
With rates naturally increasing due to the quick turnaround in ocean freight demand, container shipping liners no longer have to resort to artificially propping yields up by cutting capacity via methods like blank sailings or vessel swapping.
According to Drewry’s container capacity insight online tool, blank sailings from Asia to the West Coast of North America will decrease 28 percent month-on-month from 33 in May to 24 in June.
The number of blank sailings from Asia to the East Coast of North America will decrease from 23 in May to 17 in June, a 23 percent drop. This will result in double-digit increases (or returns) of ship capacity to these trades, after the recent cuts.
“It is a feature of the current volatile macro-environment that ocean carriers are ‘cancelling cancellations’ of sailings,” Drewry said in a post on LinkedIn. “We notice that the container shipping market is reacting to trade policy announcements with swings in trade volumes, capacity volumes and spot prices, similarly to the stock market.”