Asia to US freight rates have peaked after carriers rolled back the increases from the last 2 weeks as the new Transpacific capacity injections have exceeded market demand, especially to the Los Angeles/Long Beach PSW gateway where carriers are struggling to fill the ships. Although PNW and US East Coast capacity remains tight, it will not be enough to push through a fresh round of rate increases in mid-June as the carriers focus on holding their recent gains. Carriers’ initial exuberance has been curbed, with several transpacific extra loaders withdrawn as rates tumbled barely a week after the 1 June rate hike.
The absence of any container shortage in Asia, as well as the manageable port congestion situation has capped the rate surge, with the SCFI expected to reverse course this week after 4 consecutive weekly gains.
Johnson Leung
No box shortage to drive sustained freight rate surge
New container inventories in China climbed to a record high of 1.55m TEU at the end of May, with the recent surge in Transpacific cargo demand failing to run down the supply of containers. Concerns over container shortages proved to be unfounded despite the delays in returning empty containers from Europe and North America given the ready availability of new boxes with both carriers and lessors taking advantage of the recent drop in new equipment prices to order more boxes. New box deliveries reached over 520,000 TEU in May, with over 2.3m TEU already delivered so far this year, ensuring that there will not be a repeat of the severe box shortage that the market experienced in 2021 when Chinese box inventories dropped to just 0.1m TEU at the height of the COVID crisis.
Register Free Trial
Weekly/Monthly Market Pulse: US$1,500/US$1,800 per year