Uncertainties prevail over Trans-Pacific freight rates amid...
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Uncertainties prevail over Trans-Pacific freight rates amid overcapacity

CONTAINER freight rates on the trans-Pacific trade have declined to their lowest level in 12 months, while surplus capacity floods into service, leading to uncertainty over the direction trans-Pacific rates will head in over the coming months.

17 December 2017 - 20:00 - Update: 19 December 2017 - 02:44

Rates could continue to come under downwards pressure and drop below the key level of US$1,000 per FEU to the US west coast and $1,600 per FEU to the US east coast warns Alphaliner.

Freight rates to the US are well below where they stood at this time in 2016. Asia-US west coast rates are 22 per cent lower than during the same week last year and rates to the east coast have fallen 23 per cent year on year, reports IHS Media.

Spot rates from China to the US west coast declined to $1,078 per FEU two weeks ago, compared with a peak of $2,211 per FEU in January, while rates to the US east coast decreased to $1,804 per FEU, down from their $3,647 per FEU peak in January, according to the Shanghai Shipping Exchange's Shanghai Containerized Freight Index (SCFI).

Many attempts to implement general rate increases (GRIs) this year by shipping lines participating in Transpacific Stabilization Agreement (TSA) and non-members have proved to be futile. There are now fears that Maersk Line's decision to exit the TSA this December - following in the footsteps of other major carriers - could further destabilise the trade.

Alphaliner said Maersk's departure will shrink the TSA carriers' share of the trans-Pacific trade to 65 per cent, down from a peak of 80 per cent in the past.

The failure of 18 attempts this year by TSA carriers to impose GRIs, ranging from $400 to $1,000 per FEU, has taken place even as the total US container trade increased by 3.3 per cent year on year during the first three quarters of 2017, according to PIERS, a sister product of JOC.com.

SeaIntel pointed out that volume growth on the Asia-North America trade has come to a standstill, which it described as "very worrying", as it had been expanding by 8.3 per cent in the first nine months of the year, but the growth rate in October slowed to just 0.1 per cent.

 

 

 

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