The continuing weakness in U.S. import demand and the specter of too much vessel capacity undermined average spot rates on the eastbound trans-Pacific this week for the fourth week in a row.
Drewry’s Hong Kong - Los Angeles Container Rate Benchmark
Rate per 40-Foot Container and Week-to-Week Percent Change
The benchmark rate fell to $2,217 per 40-foot container in the week ending March 20, down 1.9 percent or $43 from last week, according to the Wednesday release of the Drewry Hong Kong-Los Angeles Container Rate Benchmark. During the past four weeks, prices have dropped 12.6 percent or $319.
The continuing decline in Drewry’s Hong Kong-to-Los Angeles Container Rate Benchmark wiped out the Jan. 15 general rate increase of $600 per 40-foot-equivalent units that was recommended by the Transpacific Stabilization Agreement. The rate is essentially back to where it was in the first week of 2013, when it stood at $2,213. Despite the continuing decline, this week’s rate is still 10.1 percent or $204.29 higher than it was during the same week last year.
Asia-West Coast rates continued to fall last week. The week ending March 15 saw a drop of 3.1 percent or $67 per FEU, for the seventh straight weekly spot rate drop, according to the Shanghai Containerized Freight Index. Rates dropped 16 percent or $398 between Shanghai and the U.S. West Coast during those seven weeks.
Carriers will try again to boost rates on April 1, when members of the Transpacific Stabilization Agreement plans to impose an increase of $400 per FEU to the U.S. West Coast. If that rate increase doesn’t hold up, it’s likely to put a cap on annual contract increases, because spot rates have had an impact on contract rates in recent years.