The Drewry benchmark rate for shipping from Hong Kong to Los Angeles fell $100 to $1,886 per 40-foot container in the week of March 26, shedding all the gains achieved from the mid-March general rate increase.
Carriers in the Transpacific Stabilization Agreement implemented a GRI of $300 per FEU on Asia-U.S. rates on March 15, but the benchmark rose only $100, which has now been lost. TSA members will attempt to lift rates again by $300 per FEU, starting April 15.
The current Hong Kong-to-Los Angeles rate is down 13.4 percent or $291 year-over-year, and dropped 5.0 percent from the rate on Jan. 1 of this year.
Drewry said in this week’s release that it expects rates to remain under pressure until the mid-April GRI, at which time a slight recovery in pricing is expected.
In the week of March 21, almost one week after the effective date of the TSA’s GRI, the spot rate to the U.S. West Coast as indexed by the Shanghai Containerized Freight Index was $1,865 per FEU, down 3.4 percent or $66 from the prior week, giving up 45 percent of the $147 gain achieved around the TSA’s GRI.
Carriers’ abilities to implement rate increases successfully since the beginning of 2012 have declined, according to a recent SeaIntel Sunday Spotlight report. The analyst said carriers’ behavior “needs to change drastically” if freight rates are to be kept under control in the face of new capacity, which will not be easy as more 10,000+ TEU ships are delivered this year. Capacity is expected to grow 5.3 percent this year, according to Jefferies.
“Instead of a GRI signaling an increase in rate levels, it is increasingly a tool used to simply maintain rates at the current levels,” SeaIntel noted.