[FBX Weekly] Transpac rates drop as peak season comes to an end – American Journal of Transportation
By: AJOT | Nov 10 2021 at 11:30 AM | Maritime News | Liner Shipping
With peak season urgency solidly behind us, this week saw a significant fall off in transpacific ocean rates.
The pandemic-driven increase in spending on goods has fuelled growth in ocean volumes and nearly uninterruptedly pushed container rates up since June 2020. But the additional demand driven by this year’s peak season supercharged pressure on rates this summer. This led to a 70% price spike over the last two weeks in July – the sharpest climb of the past 18 months.
So now, the easing of that peak season demand – likely aided by the impact of energy-driven supply constraints to Chinese manufacturing – seems to have led to the largest price drop of the past two years.
Asia-North America West Coast rates fell 26% this week, though they remain extremely high at $13,924/FEU. Rates are nearly 30% higher than their level just before the July spike, 261% higher than a year ago and 9X more than in November 2019. For the first time since June, there are reports that many transpacific bookings can be made without paying the hefty premiums that were a major factor in the July spike, suggesting drops in premiums are contributors to the current decrease as well.
Other trends, like the recent dip in transpac vessel speeds on the return trip to Asia and falling container ship charter rates, could also reflect a post-peak decrease in demand.
Importers will welcome the lower rates, but prices are likely to be kept well above the norm by port congestion and low inventories and still-elevated consumer demand.
Though there are indications that new measures are improving yard congestion at LA/Long Beach and new federal spending could help some ports in the near term, ports remain overwhelmed. And though the latest NRF analysis of US retail ocean import volumes reflects the moderate short-term easing, it also shows that demand is expected to remain extremely elevated – 30% higher than November-December volumes in 2019 – through the end of the year.
With the holidays nearing and ocean delays pushing some shipments to air, peak season air cargo rates have continued to climb. The Freightos Air Index (FAX) China – US West Coast lane hit $14.22/kg last week, approaching five times the norm.
New US regulations allowing vaccinated foreigners to enter the country are expected to drive an increase in badly-needed passenger jet cargo capacity to the transatlantic lane. FAX Europe-North America rates were at $5.09/kg last week, about 2.5 times the norm. The hope for shippers is that the additional capacity will ease pressure on rates, but holiday season demand and ground handling labor shortages may not lead to that outcome.
ECU Worldwide, global multi-modal logistics major and the world’s leading player in Less-than Container Load (LCL) ocean freight consolidation, today launched an intensive industry study on ‘The state of API…
New team structure to advance accelerated growth and strategic opportunities for TOTE Group, TOTE Maritime Alaska and TOTE Maritime Puerto Rico
Mining billionaire Andrew Forrest said he aims to create the world’s first ammonia-powered ship before the end of next year, part of an ambitious plan to run all his company’s…
American Journal of Transportation
116 Court Street, Suite 5
Plymouth, MA 02360