Rising Asia-US container spot rates shrug off capacity additions

JOC 04 Sep 2020 Share
he West Coast spot rate Friday increased to $3,758 per FEU, while the East Coast rate rose to $4,538 per FEU.

Spot rates from Asia rose again this week as the import surge from July and August continued into September, despite carriers adding capacity in the eastbound trans-Pacific with extra-loader vessels.

The West Coast spot rate increased 3.3 percent to $3,758 per FEU. That is up 140 percent from $1,566 per FEU in September 2019. The East Coast spot rate jumped 7.9 percent to $4,538 per FEU. That is up 72.5 percent from last year, according to the Shanghai Containerized Freight Index, which is published in the JOC Shipping & Logistics Pricing Hub.

In the first six months of the year, with COVID-19 raging in mainland China and the US, carriers slashed capacity by blanking 106 sailings from Asia to North America, according to Sea-Intelligence Maritime Analysis. As states reopened their economies, imports have climbed steadily since late June, pushing spot rates higher.

Carriers responded to the rising import volumes by deploying single-voyage calls in addition to the regularly scheduled weekly services. Port executives in Southern California, the largest US gateway for imports from Asia, said Long Beach received 20 extra-loaders in July and August, while Los Angeles had 17 extra-loaders the past two months.

During a second quarter earnings call on Aug. 19, Maersk CEO Soren Skou said carriers were continuing to increase capacity to meet growing demand. “We, today, have more capacity deployed in the Pacific serving the US than we had in the same period last year to cater to a demand that is up between 5 percent and 10 percent year over year,” he said.

The increased capacity in the trans-Pacific has not blunted rising spot rates. The East Coast spot rate has increased 78 percent since its recent low of $2,543 per FEU on May 22, while the West Coast rate is up 124 percent from $1,678 per FEU on the same date.

Some non-vessel operating common carriers (NVOs) last week predicted that a Sept. 1 general increase would push the West Coast spot rate to $4,000 per FEU this week, but the average spot rate fell about $250 short of that benchmark.

Carriers increasing trans-Pacific capacity

Mediterranean Shipping Company (MSC) announced on Aug. 24 it will add a new weekly service from Yantian and Shanghai, mainland China, to Long Beach, US. MSC has not announced the size of the vessels in the Santana service nor how long it will operate.

According to Sea-Intelligence Maritime Analysis’ most recent Sunday Spotlight, carriers in the trans-Pacific are on track to increase West Coast capacity by 20 percent over last fall, with East Coast capacity up by almost 25 percent.

Meanwhile, NVOs have told JOC.com they expect the current import surge to last at least through September, and possibly to the end of the year. Traditionally, the peak season in the eastbound trans-Pacific ends by early November when the final shipments of holiday merchandise enter the country.

This year, however, COVID-19 has changed consumer buying habits. Consumers are buying more merchandise online, and e-commerce fulfillment is one of the key drivers of the spike in imports. At-home office furniture, laptop computers, and exercise equipment are big movers, while imports of personal protective equipment continue unabated.

JOC 04 Sep 2020