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US West Coast rates to breach US$4,000 in September

WITH China to US freight rates continuing their rapid bull run, some commentators are predicting that the China to US West Coast prices will surpass the US$4,000-mark next month

24 August 2020 - 19:00

WITH China to US freight rates continuing their rapid bull run, some commentators are predicting that the China to US West Coast prices will surpass the US$4,000-mark next month.

Container spot rates between the world's two largest economies continue to soar with the Freightos FBX01 Daily index posting a third consecutive historic record and positioning the FBX03 Daily US east coast index to follow it into uncharted territory next week.



China-US West Coast prices for a 40ft box were recently up 7 per cent since to $3,281/FEU, which is 148 per cent higher than the same time last year. The same box moving to the US East Coast was also up 7 per cent to US$3,703/FEU taking it to within 2 per cent of the highest rate posted since the index was launched three years ago.



Freightos chief marketing officer, Eytan Buchman, said strong demand rather than supply-side restraints imposed by the carriers were responsible for the runaway rates, according to UK's Container News.



Jon Monroe, president of Jon Monroe Consulting and a representative of NVOCC Worldwide Logistics said the latest news was just the tip of the iceberg. 'Carriers started this year with three GRI's and a PSS within 30 days of signing the contracts,' said Mr Monroe. 'What seemed to be unexpected was that they could maintain the rates and in fact increase them.'



Talk of a further general rate increase in September, Mr Monroe said, could push 'WC rates to US$4,000/FEU and EC rates to approximately US$4,600. The third quarter should explode. Vessels are back and extra loaders have been introduced. August and September will be huge months for carriers. Still a strong flow of containers. So much so that there is now an imbalance of 40ft high cube equipment in the Transpacific.'



Freight forwarders were bracing themselves for more increases into September.



'Chinese and US authorities are making inquiries into the role of cancelled sailings and capacity restrictions in the June and July rate spikes. But with Asia to US capacity nearly completely restored, this month's hikes are definitively demand-driven,' said Mr Buchman. 'Even with the increases, space is tight, with delays, rolled shipments and premiums for guaranteed spots.'



The bull run has been a welcome boost for shipping lines that have been bringing tonnage back on stream to cater for the recovery in demand whilst avoiding the usual fight for market share. At the same time the lines have found a new place to compete by opening their tonnage up to play the spot market and grab last-minute shippers.


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