Trans-Pacific container spot rate drop caps weak peak

Trans-Pacific container spot rate drop caps weak peak

Eastbound trans-Pacific spot rates slipped for the second straight week, and there’s little sign the next round of tariffs on imports from China is boosting freight volumes. Photo credit: Shutterstock.com.

Spot rates in the eastbound Pacific dropped this week, a sign that the traditional peak-season increase in imports from Asia was short-lived. And there’s little sign the next round of tariffs on imports from China, set for mid-December, is boosting freight volumes.

The West Coast spot rate was $1,351 per FEU, down 11.8 percent from $1,532 last week. The East Coast rate was down 6.8 percent to $2,398 per FEU, from $2,572 last week, according to the Shanghai Containerized Freight Index (SCFI) published in the JOC Shipping & Logistics Pricing Hub.

Early November marks the end of the peak shipping season. In order to have holiday goods on store shelves for the Black Friday sales after Thanksgiving, shipments must have entered United States ports by now. The 2019 peak season experienced only one increase in spot rates, a 16.7 percent gain to $1,588 per FEU to the West Coast and 8 percent bump to $2,604 per FEU to the East Coast on Nov. 1. Spot rates have declined for two consecutive weeks since Nov. 1.

“The holiday rush wasn’t much of a rush,” Kevin Krause, vice president of ocean services at SEKO Logistics, told JOC.com.

Retailers had been predicting another mini peak in imports in November ahead of the 25 percent Dec. 15 tariffs on $300 billion of imports from China that are still set to go into effect even as negotiations continue between Washington and Beijing. Carriers say space on vessels leaving Asia, although somewhat tight, has not resulted in shipments being shut out of their intended voyages.

Advance bookings already beginning to slip

A shipping executive this week told JOC.com his company experienced an increase in volumes earlier this month, but advance bookings for the rest of the month “are falling off.”

The next milestone in the Asia-US trades will occur in December due to an increase in bunker fuel costs triggered by the Jan. 1 implementation of the International Maritime Organization’s (IMO's) low-sulfur fuel requirement

Lunar New Year 2020 celebrations, when many factories in Asia close for a week or two, falls on Jan. 25, so production of consumer merchandise and manufacturing inputs should ramp up in December-January. Carriers and non-vessel-operating common carriers (NVOs) are waiting to see how holiday sales perform this year before projecting import volumes in December and January.

But Gene Seroka, executive director of the Port of Los Angeles, told JOC.com that conversations port staff have had with factory owners in China indicate that a big rush in imports before Lunar New Year does not look likely right now.

Contact Bill Mongelluzzo at bill.mongelluzzo@ihsmarkit.com and follow him on Twitter: @billmongelluzzo.