The Salvation of Peak Season?

Freight Rate Update Wk 43

By John Edmonds, Research & Marketing, Freightos

It’s the height of peak shipping season and despite a decidedly lackluster October, many carriers have scheduled general rate increases (GRIs) for November. And they couldn’t come sooner; China-US West Coast prices last week were nearly 30% lower than 2016 prices.

And indeed, carriers announced increases ranging between $600-$1,000 (per 40 ft container) for the China-US trade lanes. But following two solid months of downward drifting freight rates, and with no capacity issues on any of the major lanes, achieving anything more than a fraction of these increases seem aspirational at best.

In reality, the actual rate increases we’re seeing are in the $200-$300 range for China-US West Coast, and a more aggressive $500-$600 range (25% increase) for China-US East Coast. Even then, it remains to be seen how long into the new month that these modest increases will stick.

If this seems unduly pessimistic, consider that this week marks the 10th straight week of declining rates on the China-US East Coast lane.

TRADE LANE THIS WEEK LAST WEEK WOW CHANGE YOY CHANGE OUTLOOK
China-US West Coast $1,312 $1,312 0% -31% Partial GRI implementation.

Space now easing.

China-US East Coast $1,719 $1,765 -3% -33% Partial GRI implementation.

No capacity issues.

China-Europe $1,355 $1,328 2% -3% Small GRIs likely.

No capacity issues.

China-Mediterranean $1,234 $1,262 -2% 4% No capacity issues.
Europe-US East Coast $1,390 $1,385 0% 0% No capacity issues.
Europe-Sth America Atlantic $1,105 $1,104 0% 52% Isolated PSS for Nov 15.
No capacity issues.
Europe-Sth America Pacific $1,743 $1,553 12% 23% No capacity issues.
FIGURE 1: FREIGHTOS INTERNATIONAL FREIGHT INDEXES: MAJOR LANES WEEK ON WEEK AND YEAR ON YEAR

Key Points

  • This week’s China-Europe rates look healthy on the table, with week on week and year on year results looking relatively favorable. However, to put this in context – this is only the 4th of the last 17 weeks (since the first full week of July), where this year’s rates been higher than last year’s rates.
  • Europe-US East Coast rates may be on a par with last year’s rates, but you have to all the way back to W3 for the last time this year’s rates were above last year’s rates.
  • China-US West Coast rates have dropped 19% (from $1,612 to $1,312) since the middle of August.
  • China-US East Coast rates have now declined for the 10th consecutive week, slumping an alarming 32% from W33 rates ($2,519 w/e 20 August).
Peak Season Surcharge US West Coast index

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