Peak season shipping is in full swing, as evident by China-US shipments operating on a 3-4 week backlog for the past month.
Peak season is impacting freight prices too. Back in the last week of June, at $1,211/FEU, China-West Coast prices were just one dollar more than the previous year. But they’ve risen 72% since then and are now 29% up on last year’s prices.
Despite the peak season increase in shipments, this time last year was “trough season” for prices. China-West Coast prices fell from $1,550 in the beginning of May to below the $1,000 mark by early December. Undisciplined capacity increases had cost carriers their influence on pricing.
Recent quarterly reports show just how hard it hit, but it also shook some discipline back into them. Carriers have withdrawn services, cut back on chartered-in ships, continued with blank services (at least, for China-Europe), and stood firm on price rises. They may be tougher enforcing BCO contractual minimum quantity commitments too.
Showing some discipline has worked. Prices rose right through the summer; carrier influence on pricing is back.
– Zvi Schreiber, Freightos CEO
This week’s report
|Week 33||Week 32||Last year*|
|China – US West Coast||$2,082||1%||29%|
|China – US East Coast||$3,245||5%||29%|
|China – North Europe||$1,941||5%||8%|
|North Europe – US East Coast||$1,415||-14%||4%|
|* Compared to the corresponding week in 2017|
The top five indexes are all up on last week and also all up on last year, a sure sign that peak season is now in full swing.
Both China-West Coast and China-East Coast rates are currently 29% higher than at the same time last year.
With recent GRIs sticking, it’s no surprise that, on top of the September 1 increase, some carriers have announced a GRI for a September 15 GRI as well – making it the 17th so far this year.
As well as improved carrier discipline, other factors are at play, like advance ordering to beat the new tariffs on China imports. This issue may be masking an underlying rise in demand, and in itself will have a limited impact on pricing.
Typhoons in East Asia have recently caused disruptions, especially rollings when ships skip a scheduled docking. Category 5, Hurricane Lane is currently heading toward Hawaii, and will affect trade routes if it continues heading north.
The Freightos Baltic Indices reflect weekly spot rates for 40-foot containers based on 12 to 18 million price points collected every week on 12 main shipping trade lanes. The data includes a headline index – the FBX Global Container Index (FBX) – a weighted average of the 12 underlying route indexes. This data is published every Sunday. See www.balticexchange.com/market-information/containers/