With continuing uncertainty over a potential escalation of trade tariffs on Chinese imports, the mid-month General Rate Increase (GRI) round barely influenced transpacific prices. China-East Coast prices rose by just 1% and West Coast prices actually dropped.
Importers have been front-loading transpacific shipments to beat 1 January tariff increase. But, then what happens to demand? Two weeks ago, when President Trump was threatening an additional $260 billion in China trade tariffs, it looked like demand would stay high. Come last Friday, the President expressed confidence that the Chinese wanted to make a deal. However, the next day, Vice President Pence threatened to “more than double” the amount of tariffs. Given these mixed signals, it’s no surprise that 15 November GRIs barely made a blip on the radar. Expect similar with the GRIs scheduled for 1 and 15 December. Unless, of course, there is a definitive turn of events with the China trade tariff saga.”- Zvi Schreiber, CEO, Freightos
This week’s report
|Week 46||Week 45||Last year*|
|China – US West Coast||$2,527||-2%||93%|
|China – US East Coast||$3,683||1%||97%|
|China – North Europe||$1,474||-6%||-5%|
|North Europe – US East Coast||$1,515||0%||6%|
|* Compared to the corresponding week in 2017|
Peak season is over for the China-Europe lane. This week’s $1,474 is a mere 67% of where prices were just ten weeks ago ($ 2,201 on 9 September). 2M resuming the AE2/Swan Asia-North Europe loop next month should see prices drop further.
The mid-month GRI was a dud, with China-East Coast average prices rising by just $41. On the China-West Coast lane, where carriers have been more active in temporarily increasing supply, prices actually fell. Carriers have announced further GRIs for 1 December and 15 December.
Despite that, China-West Coast prices were above the $2,000 mark for the 15th week in a row. The last time it breached this mark was the week before Chinese New Year in 2017. Similarly, the China-East Coast prices breached the $3,000 mark for the 16th straight week.
Continuing high transpacific ocean prices reflects increased demand. Less Container Load (LCL) and Full Container Load (FCL) bookings on Freightos went up 40% and 42%, respectively in October, a marked contrast to last year when there was no increase at all.
The following graph illustrates the impact of trade tariffs on China/North Asia to North America West Coast prices. They rose soon after the first tariff was announced in June and have stayed high since. This is in stark contrast to last year, when, without nothing to spur demand, chronic overcapacity saw prices actually falling most weeks from late August onward.
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/