Data released by Xeneta shows that the dramatic spike in ocean freight container shipping rates is beginning to level off, as importers push back against spiraling spot rates, reports Xenata.
Spot rates
On July 15, average spot rates from the Far East to the US East Coast increased by 3.7% to USD 10,045 per FEU (40ft equivalent unit). Rates to the US West Coast increased by 2.0%, reaching USD 8,045 per FEU. Although these rates have risen by almost 150% since the end of April, the recent increases are significantly smaller compared to the jumps on July 1, when rates surged by 22% to the US East Coast and 12% to the US West Coast.
Emily Stausbøll, Senior Shipping Analyst at Xeneta, stated, “Xeneta data shows some ocean container carriers are still pushing spot rate increases in mid-July, but for the first time in a long time, some carriers are offering lower spot rates. This suggests a growing level of available capacity in the market and shippers can once again start to play carriers off against each other.”
As the balance of negotiating power shifts back towards shippers, spot rates are expected to decline. The clearest indication of this peak is found in Xeneta’s market ‘mid-high’ data, which identifies the spot rates paid by shippers in the 75th percentile of the market. The market mid-high (and high) spot rates have remained almost flat during July, indicating the high end of the market is no longer spiraling.
The market is also reaching a peak on fronthaul trades from the Far East to North Europe and the Mediterranean. Average spot rates increased by 4.7% and 3.5% on July 15 to USD 8,480 per FEU and USD 8,150 per FEU respectively, which is less than the increases of 17% and 10% on July 1.
This trend suggests that carriers may need to lower their prices to compete and retain market share, indicating a potential downturn in spot rates after a prolonged period of significant increases.
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Source: Xenata
