Transpacific Rates Soar as Carriers Push GRIs and U.S. Trade Policy Wavers

By Gavin van Marle (The Loadstar) –

Container spot freight rates on the transpacific trade saw another week of double-digit gains, as carriers forced prices with the détente in the US-China trade war continuing.

Smaller increases were seen on Asia-Europe, but forwarders questioned whether these would stick as everyone continues to look for signs of the peak season starting.

With the judgment from the US Court of International Trade declaring that many of President Trump’s so-called ‘reciprocal’ tariffs invalid coming too late in the week to have a meaningful impact on freight rate indices, the previously announced 90-day pause was most likely the chief reason for the rate strength this week.

However, the considerable uncertainty surrounding US trade policy undoubtedly affected pricing on the transpacific: Drewry’s World Container Index’s (WCI) Shanghai-Los Angeles leg gaining 17% week on week, to end at 3,788 per 40ft, while the Shanghai-New York route was up 14% week on week, at $5,172 per 40ft.

While the WCI records spot rates paid over the past seven days, the Shanghai Containerised Freight Index (SCFI) records prices quoted over the past week, and often – although not always – shows a correlation with the following week’s WCI.

If that holds true for next week, transpacific shippers could be facing further double-digit freight rate increases: today’s SCFI saw a 58% weekly rise on its Shanghai-US west coast base port leg, to end at $5,172 per 40ft, some $1,400 higher than this week’s WCI figure for the route.

Additionally, the SCFI’s Shanghai-US east coast base port was up 46% week on week, to $6,243 per 40ft, more than $1,000 above the WCI index on the route.

A jump in transpacific spot rates next week would make sense, given that carriers have general rate increases (GRIs) of $1,000 to $3,000 per 40ft due to be implemented on 1 June (Sunday).

Meanwhile, North European buyers of Asian spot freight cargo also encountered higher prices this week, the first rise since early April, after the WCI’s Shanghai-Rotterdam leg recorded a 6% week-on-week rise to $2,159 per 40ft and a 3% gain on the Shanghai-Genoa route, to $2,939 per 40ft.

And if today’s SCFI is correct, they may face higher rates next week, with the Shanghai-North Europe base port leg up 20% week on week, to $3,174 per 40ft, and the Shanghai-Mediterranean base port up 31%, to $6,122 per 40ft.

It may be that the SCFI numbers reflect the new FAK rates levels announced by carriers for 1 June, aiming for $3,100-$3,300 for North Europe shipments and $4,400-$5,000 to the Med.

However, forwarders on the trade expect the rally to be short-lived.

“We have seen rates jump from May into June; however, for Asia to North Europe, these rates are already being cut, and I expect further reductions,” one told The Loadstar.

“Some of the increase will stick, and stay above May rate levels, but not what we see right now and probably not where the carriers hoped to be. This seems more carriers trying to apply a rate increase in line with rates going up on the transpacific lanes to prevent further erosion,” he said, adding that demand remained flat and space availability normal.

“There’s no significant increase in demand yet, and bookings from Asia to Europe are so far going through without issue.”

However, another forwarder on the trade noted that “carriers are telling us the large BCOs are peaking volume right now, plus, with their blanked sailings, the vessels are full – so there is definitely an element of peak season at play”.

Zim has announced a $1,400 per 40ft peak season surcharge (PSS) on Asia-Europe shipments from 6 June, with CMA CGM set to implement a $1,000 per 40ft Asia-Mediterranean PSS on 7 June.

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