Average spot rates on the eastbound trans-Pacific increased by 3 percent this week, or $71 per 40-foot-equivalent container, indicating that carriers have only been able to nail down a small portion of the general rate increase of $500 per FEU that some members of the Transpacific Stabilization Agreement scheduled for today, Aug. 1.
The Drewry Hong Kong-Los Angeles container rate benchmark increased to $2,452 per FEU this week from $2,380 last week, when the benchmark fell for the third consecutive week after the peak season surcharge of $450 per FEU that took effect on June 10. Most of that gain has been lost. Some of the Aug. 1 GRIs are reflected in the Drewry benchmark.
“It is too early to say that the rate increase has failed, given that a number of carriers have still to implement their increases. However, early indications suggest that the rate increase will disappoint carriers,” said Martin Dixon, Drewry’s research manager for freight rate benchmarking.
He said carriers are staggering the implementation of this month’s GRI, so further rate recovery is to be expected over the next 10 days. “But it also reflects the weak state of the market as soft demand growth and insufficient capacity correction weighs on rates. We expect freight rate levels to drift back downwards through the latter part of August,” Dixon said.
Freight rates still remain high by historical standards. The current benchmark spot rate is now 44 percent above the full-year 2011 average and 40 percent higher than the 2006-2011 historical average rate, according to Drewry.
This is likely to provide support for carriers’ rate demands in next year’s contract negotiations. “While we expect further reduction in eastbound trans-Pacific spot rates through the remainder of the year, importers and exporters will have to consider the impact of any big increase in spot rates between late 2011 and late 2012 on contract rates for 2013 and adjust their negotiation strategy accordingly,” Dixon said.