According to The Loadstar, container spot freight rates on significant trade routes from Asia have experienced a continued decline this week, aided by the reopening of US east and Gulf coast ports, which has alleviated concerns over widespread congestion in the shipping industry. Despite a recent three-day strike by the International Longshoremen’s Association (ILA) that affected up to 70 vessels in the region, the backlog is expected to clear relatively quickly, with estimates ranging from a few days to as long as two to three weeks. Nevertheless, the disruption does not seem likely to have a substantial effect on freight rates.
Freight Rate Trends and Analysis
Judah Levine, lead analyst at Freightos, observed that ocean freight rates to both coasts of the US were already on a downward trend even before the strike and continued to decline during the closures. Current rates have decreased by over 30% from their peak in July. With the strike now resolved, further decreases in rates are anticipated. Although ocean carriers had announced potential surcharges ranging from $1,000 to $4,500 per 40ft container due to the anticipated disruptions, these charges have not yet affected spot rates, as they were scheduled to take effect in mid-October or later. As a result, most carriers have now suspended these new surcharges.
Impact of Seasonal Demand Fluctuations
Following the end of the strike and with peak season demand largely behind, freight rates are likely to continue their decline due to the seasonal lull in volumes that typically occurs between the peak season and the lunar new year. However, persistent congestion at US east coast ports may slow the pace of this decline as operations gradually recover.
Spot Rate Changes by Route
According to Drewry’s World Container Index (WCI), spot rates on the Shanghai-New York route decreased by 3% week-on-week, settling at $5,761 per 40ft container. The Shanghai-Los Angeles route experienced a more significant drop of 5%, reaching $5,071 per 40ft. Additionally, the Xeneta XSI transpacific route saw a 2.5% decline, bringing rates down to $5,489 per 40ft.
Carriers Respond to Demand Weakness
In response to decreasing demand, ocean carriers have begun increasing the number of blanked sailings on key east-west routes to avoid exacerbating congestion on the US east coast. MSC, a member of the 2M Alliance, recently announced four blank sailings on its Asia-US east coast services, citing ongoing port congestion that has hindered cargo handling and led to vessel backlogs. This situation has made it difficult for ships to return to Asia in time for their scheduled rotations.
Cancellation Trends Across Routes
Drewry’s weekly blank sailings tracker indicated that there were 69 cancelled sailings between 14 October and 17 November across transpacific, transatlantic, and Asia-Europe routes, which represents a 10% cancellation rate out of the 693 scheduled sailings. Notably, 58% of these blank sailings are expected to occur on transpacific eastbound routes, while 26% will be on Asia-Europe routes and 16% on transatlantic westbound routes.
Continued Rate Adjustments in Asia-Europe Trade
Rates in the Asia-Europe trades also experienced minor declines, with the WCI reporting a 6% drop on the Shanghai-Rotterdam leg to $3,591 per 40ft container, and a 2% decline on the Shanghai-Genoa leg to $3,784 per 40ft. The transatlantic trade remained relatively stable, with the WCI’s Rotterdam-New York route seeing a slight increase of 1%, reaching $2,083 per 40ft. Meanwhile, Xeneta’s transatlantic rates rose by 6%, achieving a new rate of $3,018 per 40ft container.
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Source: The Loadstar
