Trans-Pacific Sailing Rates Drop Amid Pre-Lunar New Year bookings

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  • All-inclusive rates touch $12,000/FEU to USWC
  • Southeast Asian market finds rate balance
  • Europe imports soften, rates ease

Sources say that all-inclusive rates for trans-Pacific sailings in the March loading period have edged dropped significantly from pre-Lunar New Year bookings, reports Platts.

Shipping demand unclear

The shipper demand and Asian output picture for late February are still unclear, as a longer-than-normal holiday period, coinciding with the Beijing Olympics, could result in a slowdown in Asian exports.

During the week, S&P Global Platts heard all-inclusive premium bookings into the USWC at $12,000/FEU. Offers into the US Atlantic Coast were at the $13,000/FEU and above level, for post-Lunar New Year sailings.

Adding the premium these days is still a pretty stiff requirement unless you have some solid relationships with the carriers for allocation,” a source said.

While discounted, all-inclusive rates remain well above base FAK rates. Platts Container Rate 13 — North Asia-to-West Coast North America — was assessed Jan. 27 at $9,500/FEU, indicating that premiums still command an increase of at least $2,500/FEU above base rates.

Many market sources remain in a wait-and-see position, hopeful for some partial easing of logistical constraints during the Asian holiday period.

The mark-ups have been muted for the moment,” said a US-based carrier.

Southeast Asia rates stable

The all-inclusive premium rates on the Southeast Asia-to-North America shipping lane remained largely stable during the week, with some weakness recorded in the rates to the US West Coast, sources said.

For East Coast North America, prices were mostly at par with the last week at $17,000-$19,000/FEU but for the West Coast, the rates eased to $14,000/FEU, compared with the lower cap of $15,000/FEU earlier. Some bookings were, however, still placed at higher rates, up to $17,000/FEU, sources said.

The demand might have softened recently, but I would say the rates are stabilizing, not falling. The delays and blank sailings are likely to return after the Lunar New Year, “a source based in Singapore said.

The factory shutdown in China in early February may hit the supply chain harder as there might be a huge backlog when the operations resume the source said. “Concerns around COVID infections and port disruptions are also there in the market.”

Container volumes at Chinese ports in 2021 rose 7% year on year to 282.7 million twenty-foot equivalent units, according to data released by the Ministry of Transport.

The increase was due to persistent strength in demand from the US, mainly for electronics and pharmaceuticals, sources said.

However, December traffic fell 4.5% month on month to 23.1 million TEU, the data showed. The decline in December could be attributed to the slowdown ahead of and during the holiday season in the West, sources said.

Shanghai, one of the largest container ports in the world, handled 47 million TEUs in 2021, up 8.1% year on year, the data showed. In November, volumes at the port stood at nearly 4 million TEU, down slightly year on year.

Asia-Europe rates ease while premiums scarce

Rates from Asia to Europe saw a slight downside over the course of the week as momentum in the market started to slip ahead of Lunar New Year.

This was largely expected as a lack of port staff and manufacturing capacity over the holidays has given some bearish sentiment to the market. This, however, is expected to be short-lived as demand is due to spike post-Lunar New Year into March.

Despite the slight easing in terms of pricing, there is still a lack of premium rates for the Asia-to-Europe container market, with most shippers still conducting business on a FAK basis.

It’s the holidays, nobody can move goods and so the ports can clear out some of their boxes, carriers can rebalance schedules,” said a freight forwarder. “All of this sounds good until you look at the post LNY demand numbers, then you realize that we will be back to square one come mid-February.”

Platts Container Rate 1 — North Asia-to-North Continent — fell $250 on the week to $14,750/FEU.

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Source: Platts

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