Trans-Pacific eastbound spot rates were flat for the fourth straight week at $2,213 per 40-foot container or FEU, according to the Wednesday release of the Drewry Hong Kong-Los Angeles container rate benchmark.
Following a four-month, 23 percent drop in the index since it hit a 2012 high of $2,880 in early August, it appears carriers have stemmed the rate decline in advance of a planned Jan. 15 general rate increase. That increase, as announced by carriers in the Transpacific Stabilization Agreement, is $600 per FEU to West Coast ports and $800 per FEU to other destinations. A planned mid-December GRI had been postponed from Dec. 1 but still yielded a fraction of the hoped-for spot rate increase.
According to the Dec. 18 TSA release announcing the increases, the Jan. 15 GRI is critical to establishing compensatory rates in service contracts that will last for the duration of 2013. In other words, the carriers are concerned that low spot rates could negatively impact service contract rates and thus are placing a high degree of urgency on the Jan. 15 GRI. The carriers “cannot afford another year in which expiring contracts and seasonally weak demand erode rate levels, which are then extended for 12 months in the next year’s contracts. Lines see breaking this cycle as key to their viability going forward,” TSA Executive Administrator Brian Conrad said.