Trans-Pacific Spot Rate Jumps 10.8 Percent

The spot rate for shipping a 40-foot container from Hong Kong to Los Angeles jumped to $2,189 per FEU in the week ended May 3, according to data collected by Drewry Shipping Consultants.

The Drewry container rate benchmark for the trans-Pacific route was 10.8 percent, or $213 per FEU, higher than the average rate of $1,976 per FEU recorded in the week ended April 26 and over $2,000 per FEU for the first time since February, as tracked in the Journal of Commerce container rate benchmark over the past year.

The increase in the spot rate in the most recent week reflects the higher rates that carriers are seeking in their annual service contract negotiations with U.S. importers.

“Contract rates are not driving spot rates. But carriers must have taken the view that they needed to give the spot rate a final push on May 1 to drive volume towards higher rates in both the spot and the contract market segments,” said Philip Damas, division director of Drewry Supply Chain Advisors.

The spot rate covers only about 10 percent of trans-Pacific container volume. The vast majority is covered by annual contracts that normally go into effect on May 1. But this year, as in the past few years, many shippers are still negotiating their 2010-2011 contract rates, which have not yet gone into effect.

The latest spot rate was 112.8 percent higher than in the same week of 2009, when trans-Pacific rates were still heading down in the rate war that dragged carriers’ bottom lines down as well.

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