Spot rates in the eastbound Pacific declined 7 percent to the East Coast and 6 percent to the West Coast this week as deployment of “extraloader” vessels offset peakseason volumes.
Nine carriers have announced general rate increases ranging from $600 to $1,000 per 40foot equivalent unit container effective Oct. 1, according to Alphaliner. If the experience with GRIs of earlier this year repeats itself, spot rates could increase during the coming week as importers bring their holiday merchandise into the country before the GRIs take effect. Also, factories in China will shut down beginning Oct. 1 for the annual Golden Week celebrations. Some carriers have already announced “blank” sailings for the first two weeks of October. Overall, freight rates in the eastbound Pacific appear to be stuck in a narrow range this year.
The spot rate to the East Coast this week was $2,105 per 40foot equivalent unit container, a decline of 7 percent from last week. The West Coast rate was $1,484 per FEU, down 6 percent, according to the Shanghai Containerized Freight Index published under the Market Data Hub on JOC.com. This week’s spot rate to the East Coast is 13 percent lower than the $2,433 perFEU rate in effect in Week 38 last year, and the West Coast rate is 14 percent lower than the $1,726 rate last year, according to the SCFI. Spot rates got a slight bump last week of 2 percent to the East Coast and 8 percent to the West Coast, due in part to GRIs some carriers had announced for Sept. 15. As has been the case all year, though, the rate hikes lasted only a week and then they began to erode. The peaks and valleys occurred despite relatively buoyant imports this year. According to Global Port Tracker published by the National Retail Federation and Hackett Associates, US containerized imports increased 7.3 percent in the first half of 2017 and are projected to end the year up about 6 percent compared with last year.
Alphaliner noted this week that US imports have been quite strong this peak season, but an overhang in capacity from last year, an injection of new capacity this year and deployment of extraloader ships the past two months have capped rate hikes. Carriers deployed seven extraloader ships to the Gulf and East coasts, two to the US West Coast and one to Vancouver, British Columbia. The extra capacity was apparently sufficient to offset import growth. The impact of capacity constraints was demonstrated last fall following the Hanjin Shipping bankruptcy on Aug. 31. Hanjin had controlled about 7 percent of the capacity in the transPacific. When that capacity was suddenly removed in the peak season, spot rates shot up and remained elevated during the remainder of the 2016 peak season.
Source: Journal of Commerce