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Spot freight rates on every major container lane continued to tumble over the past week as demand remained flat, while a possible short-term pre-Golden Week upsurge has so far failed to materialise.
Golden Week begins on 1 October and the week-long public holiday sees work stop across the country – in previous years there has often been a spike in demand over the fortnight before it begins.
However, it would appear shippers have more pressing issues, particularly the growing probability of a strike on the US east and Gulf coasts, which would explain this week’s dramatic collapse in Asia-North America east coast spot rates as their window to get import cargo into the east coast before 1 October has now disappeared.
The Shanghai-New York leg of Drewry’s World Container Index (WCI) saw its spot rate decline 21% this week to finish at $6,661 per 40ft.
“Shippers are transferring their cargo from the US east coast to the west coast to avoid the planned ILA strike in October, resulting in a drop in demand,” Drewry said.
“This resulted in a huge 21% decline in east coast spot rates. Due to weak demand, Drewry expects East-West rates to decrease further in the upcoming weeks,” it added.
Freightos lead analyst Judah Levine explained: “As we’re now about past the deadline to move containers from Asia to the east coast before a strike, there are more reports of carriers offering discounts and expectations that east coast rates are likely to drop significantly soon.
“This deadline may add some buoyancy to west coast rates as more volumes shift there from the east and Gulf.
“The ILA and port operators are still far apart on issues like wages and port automation, and with negotiations suspended a strike is looking more and more likely.
“As most importers pulled peak season shipments forward for exactly this reason though, a strike may not have a widespread impact on the availability of holiday season goods for consumers,” he added.
Indeed, of the major east-west trades, the WCI’s Shanghai-Los Angeles leg saw the flattest declines, down 7% to $5,627 per 40ft, while the Xeneta XSI transpacific component was down 4% to $6,342 per 40ft.
Meanwhile, this week saw another set of double-digit declines on both the Asia-North Europe and Asia-Mediterranean routes, providing further evidence that 2024’s peak season has come to an early conclusion.
The WCI’s Shanghai-Rotterdam leg declined 17% to finish the week on $5,152 per 40ft, while the Shanghai-Genoa leg was down 10% to $5,256 per 40ft.
However, the current spot rates on these two trades are 297% and 210% higher respectively on a year-on-year basis; while the Shanghai-Los Angeles rate is 160% higher than a year ago and the Shanghai-New York now (only) 120% higher than a year ago.
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