
Asia-US East Coast spot rate climb stalls - but is it just a blip?
Indices appear uncertain how to price spot rates this week, but what seems clear is that the Asia-US East Coast trade's substantive growth trajectory of recent weeks has hit a bump - the question is whether this is a blip or something more transformative.
According to Drewry's World Container Index (WCI), spot pricing on its Shanghai-New York routing dropped 2% week on week, hitting $9,333 per 40ft, while the traditionally more resilient Shanghai-LA route went from 9% growth last week to flat this week, at $6,818 per 40ft.
Indications are that the east coast dip may have been something of a blip, Drewry noting it expects resilience in demand, and the ability of the carriers to manage capacity will mean "freight rates remain less volatile next week".
However, sources questioned the logic, particularly with the push to resume Red Sea transits picking up; one source telling The Loadstar: "When that happens, there will be a surge of capacity on the market and rates will crash."
Another source concurred, asking: "Why are carriers doing this? It has been their lifeline since the post-pandemic rates collapse, so if they are all going back to the Red Sea, we can surely expect to witness a massive drop off in rates."
Not all indices agree and, offering a counterpoint to the negativity of the WCI, Freightos's FBX suggests that the Asia-US East Coast trade's growth rate may be slowing, but its numbers suggest pricing has yet to go into reverse.
The FBX pointed out that growth on the trade was up 3% week on week, for an average of $9,576 per 40ft, and well ahead of the $5,073 the index put the pricing at just three months ago, with Asia-US West Coast up 1%, to $7,491 per 40ft.
Linerlytica said: "East coast rates continue to outperform, with capacity remaining in short supply that has been worsened by compounding congestion at Chinese ports and tightening draught restrictions on the Panama Canal.
"Transpacific demand continues to edge upwards, with the strength continuing into September, in contrast to the sluggish European demand where reduced capacity, with vessels pushed out of position, failed to lift rates."
On Asia-Europe trades, the theme was one of continuity, with spot rates again falling. Shanghai-Rotterdam was 3% down week on week, to $4,287 per 40ft and Shanghai-Genoa down 2%, to $4,866 per 40ft.
Vespucci Maritime CEO Lars Jensen said: "The post-peak slow downward slide continued for the seventh consecutive week. Over these weeks North Europe rates are down 13% and Mediterranean rates are down 25%."
Drewry described the east-west container freight market as being "racked by uncertainty" amid the geopolitical and operational pressures that are continuing to reshape shipping routes - the issues in the Strait of Hormuz the most pronounced.
Things are not being helped by low water levels along the Rhine. "We did have some rain this week, though," one source told The Loadstar.
Consequently, Drewry advised shippers: "With carriers adjusting capacity through blanked sailings, shippers should book early and allow additional lead time to minimise rollover and transit-delay risks."
Linerlytica added: "The difference in cargo strength is expected to last for at least one more month, with transpacific rates expected to hold at current elevated levels."
One source active in the Asian markets told The Loadstar they were expecting much the same.