Spot rates in the eastbound Pacific jumped 21.8 percent to the West Coast and 8.1 percent to the East Coast this week, but it is too early to tell whether this was a one-off spike or the first hint of peak season momentum, according to a cargo consolidator and former shipping executive.
The spot rate for shipping a 40-foot container from Shanghai to the West Coast was $1,403 per FEU, up from $1,152 per FEU last week. The East Coast rate was $2,371 per FEU, up from $2,193 last week, according to the Shanghai Containerized Freight Index published in the JOC Shipping & Logistics Pricing Hub. The year-over-year West Coast rate is down 12.6 percent and the East Coast rate is down 10.7 percent.
US imports from Asia dropped steeply in late March according to normal seasonal trends. Factories in Asia shut down for a week or two for the lunar New Year celebrations in mid-February. It took several weeks for the factories to return to full production. However, “Demand picked up significantly in the last two weeks,” said David Bennett, president of the Americas at Globe Express Services.
This was the first large rate hike since the spot rate bottomed out at $945 per FEU to the West Coast on March 23. The West Coast rate stayed around $1,120 to $1,150 for most of April.
On the other hand, in past years when cargo volumes began to increase in the spring, carriers would implement general rate increases, usually around May 1, in an attempt to jump-start the peak season. “It’s a game they play every year,” said a former shipping executive. It usually doesn’t work, as rates normally drop off until mid-summer. Spot rates begin to climb again when vessel space gets tighter with back-to-school and then holiday merchandise.
Last spring the West Coast rate peaked at $1,606 per FEU on April 28 and then declined, bottoming out at $1,092 on June 23 before beginning the peak-season ascent. East Coast rates followed a similar trend. Year-over-year comparisons until now have been down by double digits, but that trend could be coming to an end. The spot rates began to slip last May and never regained the seasonal levels that had been maintained from the autumn of 2016 through the winter of 2017.
Contact Bill Mongelluzzo at firstname.lastname@example.org and follow him on Twitter: @billmongelluzzo.