Shipping lines finally seem to be making some headway in managing vessel capacity in the Asia-U.S. trades. Spot rates have been on the rise for three straight weeks, rebounding to levels last seen in early 2023 and late 2022, according to several index providers. U.S. import bookings remain above pre-COVID levels, and multiple analysts are now highlighting positive rate effects from reduced vessel capacity.
Trans Pacific Capacity
“Typically, higher demand leads to higher capacity availability, but over the past month, liners have focused on tightening service offerings as demand has improved,” Omar Nokta, shipping analyst at investment bank Jefferies, said on Monday. Platts, an analytics and price-reporting agency, quoted multiple market participants who see effects from capacity constraints, including more limited space availability forcing shippers to book earlier and expectations for continued spot rate gains in August.
One logistics source told Platts that Asia-West Coast capacity is down 15% this month versus June, with Asia-East Coast capacity down 8% to 10%, including the effect of Panama Canal restrictions. Another analytics company, Linerlytica, highlighted divergent trends in the trans-Pacific and Asia-Europe as a result of capacity issues, with trans-Pacific rates rising and Asia-Europe rates still falling. Many of the new buildings being delivered this year are ships with capacity of 24,000 twenty-foot equivalent units designed for Asia-Europe service, creating supply side pressure in that trade.
West Coast Indexes Up
Spot rates are still believed to be at loss-making levels in the trans-Pacific and recent double-digit gains are off a low base. Yet rates are moving closer to breakeven and they’re already above or in the vicinity of pre-COVID levels, according to most spot indexes. Different indexes use different data sources and different methodologies, so they come up with different rate numbers. However, they’ve all trended in the same upward direction in the past three weeks. The Shanghai Containerized Freight Index (SCFI) for the China-West Coast trade was at $1,764 per FEU for the week ending Friday, up 50% from the week ending June 23 (when the SCFI route hit its lowest level in three months).
Platts assessed North Asia-West Coast North America spot rates at $1,700 per forty-foot equivalent unit on Monday, up 31% week on week to the highest level since October. Platts put North Asia-East Coast North America rates at $2,600 per FEU, up 13% week on week to the highest level since early February. According to the Drewry World Container Index (WCI), spot rates on the Shanghai-Los Angeles route averaged $1,965 per FEU during the week ending Thursday, up 29% from the last week of June. Compared to pre-COVID, WCI rates for this route are 20% higher than at this time in 2018 and 24% higher than in 2019.
Did you subscribe to our daily newsletter?
It’s Free! Click here to Subscribe
Source: Freightwaves
