News / 'Trump card' played in US-China trade war could mean a winning hand for carriers 

© Kseniia Glazkova

Against the backdrop of an escalating US-China trade war, transpacific ocean carriers have had some success this week in lifting spot rates between Asia and the US west coast. 

There was also a spike in long-term contract rates recorded this month that will be welcome news for the loss-making container lines. 

The Shanghai Containerized Freight Index (SCFI) recorded a 13.7% jump today for US west coast spots, to $1,471 per 40ft, in reaction to blank sailing announcements from carriers that must shore up the market ahead of the critical peak season. 

Rates recorded by the SCFI for US east coast ports were flat, however, at $2,541 per 40ft, although supply has hitherto been tight on the route due to Panama Canal draught restrictions underpinning rates on the trade. 

Although transpacific spot rates have slumped by 22% for the west coast and 16% on the east coast since the beginning of the year, boosted by front-loading demand, they are currently on a par with last year’s market.  

According to digital booking platform Freightos’s chief marketing officer, Eytan Buchman, the “real ‘Trump card’ for transpacific rates, at least in the short-term, is the Chinese threat to cut off rare earth exports to the US.” 

Mr Buchman said this could trigger the US to retaliate with an additional 25% of tariffs on the remaining 57% of Chinese imports currently are not subject to a duty. 

“In turn, this could trigger a spike of tariff-beating exports and, potentially, a much–needed early peak season for carriers,” suggested Mr Buchman. 

Elsewhere, Asia-North Europe carriers saw the SCFI component increase 5% on the week to $780 per teu, suggesting the upswing in rates on the route predicted by Hapag-Lloyd chief executive Rolf Habben Jansen could be starting to materialise. 

Nevertheless, the recovery still has a way to go, as spot rates on the route are some 11% lower than in the same week of 2018. 

Meanwhile, Mediterranean ports saw the SCFI increase 4.2% to $740 per teu. Spot rates on the route are 24% lower than in early January and 17% below the equivalent week of last year, suggesting that the previous robust nature of this market has been under pressure. 

But there is good news from ocean freight benchmarking platform Xeneta, which today released its XSI public index for May. According to the latest report from the Oslo-based analytics platform, based on its crowd-sourced data, global rates climbed 11.5% across the month, with US rates for imports jumping nearly 20%. 

The increase for May followed a 4.2% dive in the index in the previous month and is evidence of the “increasingly topsy-turvy nature of the freight rates landscape”, according to Xeneta’s chief executive, Patrik Berglund. 

Indeed, the disorderly nature of container trades is evident in several other tradelanes covered by the SCFI.  For example, spot rates to Latin America spiked this week by a massive 69.5%, to $1,361 per teu. 

However, rates for the troublesome tradelane are around 19% below the level of early January, and some 38% adrift of the equivalent week of 2018.