Spot prices for container shipping rates have dropped for the first time in nearly three months, indicating a cooling in demand following US tariffs on Chinese goods and other trade disruptions that caused an earlier-than-usual peak season for restocking.
The Drewry World Container Index composite of eight major trade lanes fell 2.2% to $5,806 for a 40-foot unit, breaking a 12-week streak of increases, according to figures released Thursday. This rate is still about three times higher than at the end of 2023, when cargo ships began avoiding the Red Sea due to Houthi attacks.
container shipping rates surged unexpectedly in the second quarter due to strong US demand for goods as importers hurried to stock up before higher American tariffs on Chinese products took effect and amid concerns about a potential dockworker strike on the East and Gulf Coasts later this year. However, this momentum now appears to be waning.
The benchmark Shanghai-to-Los Angeles rate dropped for the second consecutive week, falling 4.9% to $6,934. The Shanghai-to-Rotterdam rate was nearly unchanged at $8,260, according to Drewry’s figures.
These prices reflect a softening market, as seen in the short-term container rates released earlier this week by Freightos, a cargo-booking platform. Container shipping rates that include premiums and surcharges on Asia-US West Coast services fell 4% to $7,738, while the cost from Asia to northern Europe dropped 2% to $8,420, according to Freightos.
Ups and Downs
The Port of Los Angeles and Long Beach, the busiest US gateway for maritime trade, reported solid increases in container volumes during the first half of 2024 compared to a year earlier. Similar growth was seen at Europe’s two largest container ports — Rotterdam and Antwerp-Bruges.
Adding to the demand were capacity constraints caused by the turmoil in the Red Sea and vessel diversions around the Cape of Good Hope, which led to port congestion at major shipping hubs including Singapore.
Some of these supply issues are easing. As of Tuesday, wait times for berth space in Singapore — the world’s largest transshipment hub — ranged from 50 to 80 hours, down from 70 to 110 hours in mid-June, according to industry figures.
Tide Turns
Judah Levine, head of research at Freightos, mentioned in a webcast this week that there are signs supply and demand are becoming more balanced compared to the past few months.
“Overall, the additional capacity in the main trade lanes from improving congestion and from carriers adding more services, combined with demand which might be peaking now or in the next few weeks, could lead to speculation that rates may have already reached their peak,” Levine said.
He noted that a period of peak season surcharges and general rate increases imposed by shipping lines for freight to the US and Europe from Asia appears to have halted, at least through August.
Daily quoted rates are “ticking down,” and there are reports that carriers are offering rate reductions, Levine added.
Read Also: Ship Owner Declares General Average Over Maersk Frankfurt Fire
Leave A Comment