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Strong demand for trade on the China-U.S. lanes, together with restricted capacity early this summer combined to send ocean rates to record highs.
- Despite China’s moves to stabilize rates, China-U.S. ocean rates climbed to new records, with West Coast rates approaching $4,000/FEU – nearly triple their level a year ago.
- Prices may have gone even higher if not for some carriers reducing mid-month GRIs, possibly in response to intervention by the Chinese government.
- Some carriers are also adding October capacity as a result of the governmental requests, though with demand expected to be strong this may not be enough to push rates down.
China-U.S. rates:
- China-U.S. West Coast prices (FBX01 Daily) increased 6% this week to $3,930/FEU. This rate is 187% higher than the same time last year.
- China-U.S. East Coast prices (FBX03 Daily) climbed 5% to $4,739/FEU, and are 84% higher than rates for this week last year.
Analysis
Strong demand for trade on the China-U.S. lanes, together with restricted capacity early this summer combined to send ocean rates to record highs. But despite the Chinese Ministry of Transport’s warning to carriers to stabilize China-U.S. ocean rates last week, prices continued their climb with U.S. West Coast rates approaching the $4,000/FEU mark this week, nearly tripling its level a year ago.
But that’s still probably not as much as carriers had planned.
Following the MoT’s suggestions – which have not reached the level of an official action – and growing scrutiny from the U.S. FMC, several carriers cancelled or reduced their September 15th General Rate Increases (GRIs).
The MoT also reportedly requested any cancelled sailings be restored to add supply and help ease rates, and state-owned OOCL has reinstated six of its blanked sailings around Golden Week. Maersk and Hapag-Lloyd also added or restored capacity – citing market demand, not government pressure, as the driver – though they kept some October blankings.
Peak season demand was enough to keep rates climbing even with semi-interventions. And full ships and severe equipment shortages have many shippers paying additional fees to guarantee space and containers. So with estimations that volumes will stay strong through October or even the end of the year, the added capacity may also not be enough to bring rates down just yet.
The increased scrutiny of China-U.S. shipping didn’t appear to impact China-North Europe rates, which may have hit its peak season. Container rates on the lane have climbed 30% this month and are up 75% year on year, reaching their highest point since the end of January.
China-U.S.China air cargo is also bracing for a rate hike even with more capacity coming online. Freightos.com marketplace data is showing the first signs of increases ahead of Golden Week, with a demand surge expected to start in earnest in the second half of October when tech product launches will make capacity even scarcer.