Spot rates in the eastbound Pacific edged lower this week after spiking by double digits last week as carriers attempt to maintain their pricing power during the early stages of the peak-shipping season.
The spot rate for shipping a 40-foot container from Shanghai to the East Coast was $2,661, down 1 percent from $2,685 last week. The spot rate to the West Coast was $1,661, down 2 percent from $1,687 per FEU container last week, according to the Shanghai Containerized Freight Index published under the Market Data Hub on JOC.com.
Carriers indeed have greater pricing power this year. Last summer the Pacific trades were marked by overcapacity, which suddenly dissipated when Hanjin Shipping filed for bankruptcy on Aug. 31. Hanjin had accounted for about 7 percent of total capacity in the Pacific. The East Coast rate this week was 41 percent higher and the West Coast rate was 30 percent higher than during the same week last year.
The rate hike last week was likely due to importers attempting to ship their merchandise before general rate increases that some carriers had filed took effect on Aug. 1. Normally those increases last only one week and then they begin to fall apart, until the peak season is in full swing. For example, one cargo consolidator noted that he was quoted a West Coast rate in late July of $1,950 per FEU, but this week he received carrier quotes of $1,750 and $1,530 per FEU.
Nevertheless, US imports have been strong this year, increasing 6.4 percent in the first six months, and Global Port Tracker, which is published each month by the National Retail Federation and Hackett Associates, predicts that August will be the busiest month on record since the publication has been reporting on imports at US ports in 2000. Mario Moreno, IHS Markit senior economist, projects import growth of 6.6 percent this year compared with 2016.