Cautious air cargo shippers delay tenders amid signs rates may have peaked
Air cargo shippers are increasingly delaying tender decisions and extending existing contracts, rather than locking ...
By Alison Koo
Transpacific rates, specifically for US West Coast-bound cargo, are at last showing signs of correction as capacity additions take their toll on the market.
While the Shanghai Containerised Freight Index on Friday showed Shanghai-USWC rates gaining 8% on the previous week, to $5,606 per 40ft, Linerlytica’s report today suggests rates have fallen below $5,000.
And Linerlytica analyst Tan Hua Joo told The Loadstar: “Rates are moving so quickly that the SCFI can’t keep up.”
As rates soared after 12 May, when a three-month grace period was announced in the US-China tariff war, liner operators, including opportunistic smaller entrants, rushed to add more than 560,000 teu of capacity, and Asia-USWC capacity now totals more than 2.55m teu.
Linerlytica pointed out that the 22% increase in capacity to the west coast in June – largely concentrated on the Pacific south-west corridor to Los Angeles/Long Beach, has proved “too high for the market to digest”.
Rate cuts from the smaller carriers at the start of last week had rapidly filtered to the larger carriers by the end of the week as cargo bookings turned out to be weaker than initially anticipated.
Unlike during Covid, there are no container shortages that could support further upside in freight rates. New container inventory in China climbed to a record high of 1.55m teu at the end of May, with the recent surge in transpacific cargo demand failing to run down box supply.
And ad hoc sailings have been withdrawn as cargo volumes are not enough to fill all the ships being deployed.
Xeneta analyst Peter Sand told The Loadstar: “It remains to be seen how long rates will stay high. Xeneta expects an element of front-loading to be around throughout the 90-day period.”
“As we head into the second half of June, shippers benchmarking themselves against mid-low and average freight rates on the transpacific headhaul will have to pay up as well. It’s a tight market, but not tightening further to lift mid-high, as carriers are busy and will soon be done with bringing capacity back to the transpacific.”
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