Spot Rates Jump as Shippers Rush to Beat Tariff Clock

By Gavin van Marle (The Loadstar) –

Container freight spot rates shot up on the transpacific trades this week, with an immediate surge in demand following news of a new 90-day hiatus in the China-US trade war.

This week’s World Container Index (WCI) from Drewry, which records spot rates paid over the past week, showed prices on its Shanghai-Los Angeles leg increase 16% week on week, to end at $3,136 per 40ft, while the Shanghai-New York leg climbed even higher, with a 19% gain on the previous week, to $4,350 per 40ft.

These increases were achieved on the back of a sudden jump in bookings – Hapag-Lloyd CEO Rolf Habben Jansen told analysts during the company’s first-quarter earnings call on Wednesday that, over the course of Monday and Tuesday, there had been a 50% increase in bookings compared with the previous week – combined with a series of previously announced general rate increases (GRIs) of $1,000-$3,000 per 40ft implemented on 15 May which, unsurprisingly, stuck.

Should demand continue to hold as we move further into the 90-day period, it is increasingly likely that further GRIs – also in the $1,000-$3,000 range, depending on carrier – set for 1 June, will also stick.

According to today’s Shanghai Containerised Freight Index, which records rates quoted this week, there are indications of further gains next week, its Shanghai-US west coast base port leg up 31% week on week, and the Shanghai-US east coast base port up 22% week on week.

The other side of the equation is capacity. The Gemini carriers have indicated they are upsizing transpacific vessels in response to re-energised demand.

“Our customers have got 90 days of clarity with reduced tariffs, and we are working hard to help them make the best use of this window,” Maersk told The Loadstar today.

“Since the agreement was announced, we have seen an increase in bookings for our transpacific services, and we are again adding capacity to the services, after having scaled down in April, by replacing some large vessels with smaller vessels,” it added.

Additionally, the Premier Alliance today announced that it was set to formally launch its PS5 transpacific service that had been delayed during the recent bookings drop. Lead carrier ONE said the service would launch on 5 June with the departure of the 6,500 teu YM Mobility from Qingdao.

The service features a port rotation of: Qingdao-Ningbo-Long Beach-Oakland-Kobe-Qingdao, and is expected to deploy seven vessels.

Meanwhile, the Asia-Europe trades were unmoved by the sudden change in fortunes on the transpacific, the picture unchanged from recent weeks – sluggish demand and weak pricing continuing.

The WCI’s Shanghai-Rotterdam and Shanghai-Genoa legs both lost 1% on the previous week, to end at $2,035 per 40ft and $2,742 per 40ft, respectively.

In response, this week saw a range of carriers announce new freight all kinds (FAK) rate levels on both routes for 1 June: Hapag-Lloyd set its at $3,300 per 40ft on Asia-North Europe shipments and $4,400 to the west Mediterranean; CMA CGM announced a $3,100 per 40ft FAK rate for Asia-North Europe; and MSC advised new FAK rates of $3,200 per 40ft to North Europe and $5,000 to Mediterranean ports.

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