News / Transpacific rates bull run takes a breath as Golden Week holiday looms

Container spot rates on the transpacific eased back this week, suggesting the bull run on the trade may be ending.

Today’s final publication of the Shanghai Containerized Freight Index (SCFI) before the Chinese Golden Week holiday recorded an $11 decrease for rates to the US west coast, to $3,856 per 40ft, and down $9, to $4,625, to the east coast.

SeaIntelligence’s Lars Jensen said: “This is of course not a guarantee that we have reached the peak, but for now the continued increases have been placed on pause.”

With carriers reporting strong demand visibility through October on the trade, the fundamentals are ripe for another round of GRIs, although this seems increasingly unlikely, given the recent warnings from Chinese and US regulators.

In the absence of GRIs, carriers will have to content themselves with the range of premium product fees that has spiralled the average all-in spot rate to over $4,000 per 40ft for the US west coast and in excess of $5,000 for east coast shipments.

Whether regulators decide to step in on these additional fees remains to be seen, but given that shippers have a choice, and as long as their complaints are not too vocal and carriers are seen to be adding capacity, intervention appears doubtful.

Carriers on the transpacific continued this week to deploy extra ad hoc loaders and restore blanked sailings for next month. For instance, OOCL today advised it would reinstate its East Coast China 2 sailing from Qingdao on 27 October.

“Many BCOs have commented that they see strong bookings through to the end of the year, and we have heard rumblings that demand could continue through to the Chinese new year in February,” said Jon Monroe, president of Jon Monroe Consulting and a representative of New Jersey-headquartered Worldwide Logistics.

Moreover, Mr Monroe noted, BCOs were increasingly turning to NVOCCs to cover excess containers not included under their MQCs (minimum quantity commitments) with their contracted carriers.

Meanwhile, the SCFI’s European components saw spot rates for North Europe edge down slightly, by $3 to $1,079 per teu, despite anecdotal reports to The Loadstar confirming that ships are full, with a lead time for shipment of “at least three weeks”.

Asia-North Europe carriers have obviously taken heed of ‘suggestions’ from China’s Ministry of Transport and rowed back on proposed FAK increases for October – CMA CGM has actually lopped $100 per 40ft off its FAK rate effective 1 October, reducing it to $2,700.

However, the carrier has extended its peak season surcharge of $150 per teu to the end of October, and is seeing a “good take-up” of its premium SEAPRIORTY product.

For Mediterranean ports, the SCFI recorded a slight uptick of $5 on the spot rate, to $1,193 per teu, representing a 50% increase on the rate in the same week of last year.

And spot rates from Asia to Santos, as recorded by the SCFI, saw another big jump, of $295 per teu, to a new record level of $3,942, a massive 114% higher than a year ago.