Freightos Baltic Container Report – Week 4, 2019

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  • Business in China started winding down in advance of the week-long public holiday next week.
  • China-West Coast prices dropped by $8 and China-East Coast prices gained $20.
  • The global index dropped 2% on last week, but is still 27% higher than this time last year.
  • Continuing uncertainty over China trade tariffs this year may lift demand and lessen the extent of the seasonal price falls.

Business in China has already started winding down in advance of the next week’s week-long public holiday, reports the Baltic Briefing.

Price Status

The rush to get shipments out beforehand has held China-West Coast prices above the $2,000 mark and China-East Coast prices above the $3,000 mark for the past four weeks. At $2,102, West Coast prices were down just $8 on last week. East Coast prices went up $20 to $3,312.

Effect of Chinese Spring Festival

Philip von Mecklenburg-Blumenthal, VP of FBX, Freightos reports that China’s week-long Spring Festival holiday has nudged transpacific ocean prices over the West Coast’s $2,000 mark and East Coast’s $3,000 mark for the past four weeks now. However, prices typically drop away once China gets back into full production. West Coast prices dropped 25% and East Coast prices dropped 22% in the three weeks following the holiday.

Similar Yearly Drops

In 2017, they dropped 17% and 12%, respectively. This year should be no different – we’ve already seen some carriers cancel their 1 February general rate increases (GRIs). What may buck this trend, by artificially boosting demand, is another trade tariff increase, but that seems unlikely in the next two weeks.

“China’s Vice Premier Liu is flying over later this week to meet up with Trade Representative, Robert Lighthizer, and even with an unsatisfactory outcome there’ll likely be a few more days of behind the scenes activity before any further escalation is announced”, he says

This week’s report

Week 04 Week 03 Last year*
Global $1,592 -2% 27%
China – US West Coast $2,102 0% 60%
China – US East Coast $3,312 1% 24%
China – North Europe $1,657 -5% 8%
North Europe – US East Coast $1,416 1% 0%
* Compared to the corresponding week in 2017

The mid-month transpacific GRIs have held in the lead up to China’s week-long Spring Festival holiday. China-West Coast prices dropped just $8 and China-East Coast prices gained $20. Transpacific prices typically drop away after the holiday.

  • Last year, three weeks after the holiday West Coast prices had dropped 25% and East Coast prices had dropped 22%.
  • In 2017, the corresponding drops were 17% and 12% (although East Coast prices kept falling for a further nine weeks).

Effect of the Global Index

With China-North Europe prices and several smaller indexes easing this week, the global index dropped 2% on last week, but is still 27% higher than this time last year. China-North Europe prices continue to rise; good news for carriers looking for high prices during that lane’s contract negotiation season. Several carriers have implemented mid-month Freight All Kinds (FAK) increases, or fuel-related surcharges (including Hapag-Lloyd’s peak season surcharge).

Chinese New Year Shutdown Impact

Once China returns to normal after the Chinese New Year shutdown, transpacific freight prices usually drop dramatically.

  • Last year, between 25 February and 29 April, West Coast prices fell by 19% and East Coast by 21%.
  • In 2015, between 26 February and 30 April, the corresponding drops were 23% and 26%.

Continuing uncertainty over China trade tariffs this year, however, may lift demand and lessen the extent of the seasonal price falls.

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Source: The Baltic Briefing

 

 

 

 

 

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