Late Peak Demand Drives US Container Spot Rates Higher

Container spot freight rates on the transpacific and Asia-Europe trades diverged sharply this week. A late peak season demand surge prompted freight prices to both the US east and west coasts to spike, according to data from Drewry's World Container Index.

This week's WCI Shanghai-New York leg rose 3% week-on-week, ending at $9,587 per 40ft container. That figure is almost triple the rate from this time last year, which was $3,677. Meanwhile, the Shanghai-Los Angeles route increased by 5% from the previous week, finishing at $7,185 per 40ft.

Factors Behind the US Rate Surge

Part of the upward momentum was caused by a new round of general rate increases (GRIs) implemented on 1 September. US west coast forwarder Freight Right reported these GRIs partially stuck, leading to price increases of $300 to $500 this week. The increases were also supported by strict carrier capacity management and strong demand as the shipping window to get goods onto US shelves for the holiday season closes at the end of September.

"Ocean carriers have successfully managed vessel supply by implementing strategically targeted blank sailings, modifying vessel rotations, and pulling capacity from select lanes to maintain pricing power," Freight Right said. The forwarder added that consumer and commercial demand remained strong, with volumes rising 9% week-on-week to the US west coast and 3% to the east coast.

According to Drewry's Container Capacity Insight, a further six blanked sailings have been announced on the transpacific for next week, twice as many as this week. This led the analyst to conclude that transpacific freight rates would at least remain stable in the coming week.

Contrasting Decline on Asia-Europe Trades

In contrast, spot rates on the Asia-Europe trades continued the descent that began in mid-July. This week's Shanghai-Rotterdam rate dropped 5% to $4,092 per 40ft. The decline was even steeper on the Shanghai-Genoa leg, which fell 10% to $4,368 per 40ft.

A leading European freight forwarder told The Loadstar that September rate quotes were already below this level, with little prospect of a reversal over the next month. "Demand levels have dropped off, there are no issues with bookings or allocations, and rates would decline quicker if it wasn't for port congestion or blank sailings," he said.

According to analyst Linerlytica, Gemini partners Maersk and Hapag-Lloyd are leading the discounting. They are reportedly offering rates of $3,500 to $3,800 per 40ft for vessel departures in the first two weeks of September, compared with the $3,900 to $4,400 offered by their rivals.

Even lower rates are available on the market. The Loadstar received an unsolicited offer from a Chinese forwarder quoting a spot rate of $2,799 per 40ft for Chinese ports to Felixstowe and Southampton for the rest of the month. This indicates some forwarders have excess allocations they are willing to sell. Drewry expects more of the same next week, forecasting a modest decline in spot rates as the number of blanked sailings is set to drop from four this week to just one, injecting more capacity into the market.

Transatlantic Market Shows Mixed Signals

There are initial indications that the strong transatlantic market may also be nearing an end. This is despite the WCI's Rotterdam-New York leg inching up 1% this week to end at $3,052 per 40ft. In recent days, several carriers have attempted rate hikes on the route.

MSC announced it would apply a peak season surcharge (PSS) of $600 per 40ft on West Mediterranean-North America shipments from 1 October. CMA CGM announced in late August a $2,000 per 40ft PSS on North Europe-US shipments from 20 September. However, other carriers have yet to follow suit.

One transatlantic forwarder told The Loadstar the market was becoming increasingly competitive on price. "I know a couple of carriers have tried for rate hikes, so we're avoiding them for the time being," he noted. "There are options out there with no rate increases and space available, and we even had a slight decrease from one of our carriers."