FBX Weekly Asia-US ocean rates spike as CNY approaches and equipment stays scarce

Key insights:

It turns out that, yes, freight prices can continue to increase. Pre-Chinese New Year pressure pushed transpacific rates up with Asia-US East Coast climbing 21% this week past the $6,000/FEU mark before surcharges. Backhaul rates have also spiked 55% so far this month as carriers try to balance export demands with pressure to move empty containers.

China-US rates:
Analysis

• China-US West Coast prices (FBX01 Daily) increased 10% to $4,267/FEU. This rate is 171% higher than the same time last year.
• China-US East Coast prices (FBX03 Daily) jumped 21% to $6,022/FEU, and are 113% higher than rates for this week last year.

After the moderate up and back down of ocean freight rates on the transpacific in the last few weeks, prices climbed dramatically this week, driven by the continued strong demand and boosted by the lead up to Chinese New Year (CNY) in February. 

Asia-US West Coast rates breached the $4,000/FEU mark on a 10% gain, while price to the East Coast spiked 21%, bypassing the $5,000/FEU milestone to $6,022/FEU.  Backhaul rates also continued their climb, with prices on both lanes increasing 55% so far this month. Prices from Asia to North Europe and the Mediterranean climbed a more moderate 4% and 2%, respectively, though both are well above $7,000/FEU before surcharges that make the actual cost much higher. 

Though capacity on these lanes is essentially booked up until after Chinese New Year anyway, some shippers of low margin goods are reporting being priced out of the market. And reports of postponed orders sitting in already-loaded containers can’t be helping the global equipment shortage, which is also leading carriers to simply skip certain port calls where too few loaded containers are available. In response, China’s Ministry of Transport pledged greater scrutiny of carrier pricing and surcharge practices this week.

There are mixed reports of some manufacturers in China planning to close early for the holiday since goods can’t be shipped anyway, and others planning on staying open to keep up with demand, and this uncertainty may be part of why carriers haven’t announced many cancelled sailings over the holiday yet.    

The existing backlog of volumes as well as whatever additional pressure is created over CNY will take time to clear, and – together with the expected additional stimulus from the Biden administration – could keep demand high and equipment scarce well into the spring.  This push would leave only a couple months of possible downtime before this year’s peak season uptick in July.