Trans-Pacific Spot Rate Hits New Low

Average spot rates collected by ocean carriers for a 40-foot container from Hong Kong to Los Angeles fell to a new low of $949 this week, down by 53.4 percent from $2,036 a year ago, according to data compiled by Drewry Shipping Consultants in London for the weekly Container Rate Benchmark published by The Journal of Commerce.

The rate for the week starting May 18 is thought to be the lowest rate ever. It was down 3.7 percent from $986 last week, when it fell below the $1,000 level for the first time since Drewry began compiling the rate in 2005.

Drewry compiles the average weekly spot rate from data provided by non-vessel-operating common carriers in Hong Kong. It is the rate charged by carriers for containers that are not booked under their annual contracts with large shippers. The rate, which excludes the terminal handling charge at the port of origin, applies to containers booked for passage at the last moment.

When cargo volume is strong and space is tight as it was for six years until last year, shippers have to pay whatever the carriers can charge to get their cargo aboard a ship, but when volume is weak, as it has been for the last nine months, some shippers bet that the rates will fall and wait until the last moment to take advantage of the spot rate.

Shippers aren’t guaranteed space, but in the current environment, they are almost guaranteed low rates. The weekly spot rate has gone down or stayed flat in every week since the first two weeks in August of last year, when it rose for two weeks in a row before flattening out again.

Contact Peter T. Leach at pleach@joc.com.