The Shanghai Containerized Freight Index spot rates for U.S.-bound trade lanes dropped significantly in the week of May 31, losing almost all achievement from the May 21 general rate increase. GRIs of $400 per 40-foot container moving from Asia to the U.S. West Coast and $600 per FEU from Asia to the U.S. East Coast were implemented by USL and CMA CGM on May 21.
“Following last week's SCFI heroics, the trans-Pacific trade slumped back into the red and looks set to resume the boom-bust pattern seen in recent years,” said Benjamin Gibson, freight derivatives broker at Clarksons Securities.
The spot rate to the U.S. West Coast fell to $2,008 per FEU, down 4.1 percent or $85, effectively wiping out the $96 increase from the last two weeks that had achieved 24 percent of the $400 GRI. At the current rate, achievement is down to less than 3 percent. The current spot rate declined 13.6 percent year-over-year, the eighth straight decline, and is 9.6 percent or $213 below the level seen at the beginning of 2013.
The spot rate to the U.S. East Coast fell 2.4 percent or $78 per FEU from last week to $3,176, according to the latest SCFI data issued by the Shanghai Shipping Exchange. This cut gains from the 17 percent that it had achieved during the prior two weeks to a meager 4 percent of the proposed $600 GRI. The current index level is down 8 percent from the same week in 2012 and down 5.4 percent or $182 since the beginning of 2013.
Another round of GRIs has already been announced for Asia-US lanes. The Transpacific Stabilization Agreement recommended a GRI of $400 per FEU from Asia to the U.S. West Coast and $600 to all other U.S. regions for July 1 “to pursue further revenue improvement that is essential if (carriers) are to achieve financial viability and maintain service levels customers expect in the service-intensive Asia-U.S. market.” Brian Conrad, executive administrator of the TSA, said freight rates are not staying level with rising costs. Hapag-Lloyd, OOCL and Cosco have already followed these recommendations and announced GRIs.