The average spot rate for shipping a container from China to the U.S. West Coast fell 6.8 percent to its lowest point in 20 months in the past week amid slumping U.S. consumer sentiment and the escalating oversupply of vessel capacity, according to Drewry Shipping Consultants.
The Drewry Container Rate Benchmark measure for pricing from Hong Kong to Los Angeles dipped to $1,525 per 40-foot equivalent, down from $1,636 in the week ended July 25, the lowest point since the week of Jan. 11, 2010.
Last week’s benchmark rate hit a new low point for the last 52 weeks, dropping by 46.3 percent from the same week last year, when it was $2,838 per FEU. The previous low for 2011 was $1,636 per FEU, a level held for the previous three weeks, July 11 through July 25.
Clear proof of the impact of the falling trans-Pacific rates can be seen in the poor earning reported by many container lines in the first quarter, including Hanjin, “K” Line, Neptune Orient Lines, and NYK Lines, all of which reported losses for the quarter because of falling rates on the trans-Pacific and the Asia-Europe trade lanes.
Although some carriers have withdrawn service from both trade lanes, Drewry Maritime Research is forecasting that average east-west ocean freight rates, excluding fuel, will drop by 20.8 percent in 2011 from 2010.
Drewry bases its eastbound benchmark rate on an average of spot rates it collects from non-vessel-operating common carriers in Hong Kong each week. It excludes terminal-handling charges at the port of origin.
Eastbound spot freight rates only apply to about 10 percent of trans-Pacific container volume, since most cargo is priced at a rate set under the annual contracts.
--Contact Peter T. Leach at firstname.lastname@example.org.