[FBX Weekly] China-US ocean rates climb (but slower)

Key insights:

1. Peak season demand pushed China-US ocean rates up again this week, but at a slower pace, as China-US West Coast climbed just 2%. 
2. But as capacity is tight even with restored blank sailings and new capacity being added, carriers are expected to introduce a September 1st GRI - the sixth in three months.
3. A September GRI would likely push China-US East Coast rates – which have already climbed 48% since the end of May and 19% in August – past the $4000/FEU mark, a distinction not even achieved in the Fall 2018 lead up to the trade war. 

China-US rates:

• China-US West Coast prices (FBX01 Daily) increased 2% since last week to $3335/FEU. This rate is 161% higher than the same time last year.
• China-US East Coast prices (FBX03 Daily) climbed 5% to $3892/FEU, and are 50% higher than rates for this week last year.

Analysis

Ocean rates from China to the US continued their peak season climb, but at a slower pace this week as China-US West Coast prices increased just 2%. 

Demand was strong enough to push rates up even with cancelled sailings restored and carriers adding temporary and even new permanent services on the lane. 

With reports of rolled shipments and container shortages out of China indicating the extent of the demand rush, carriers will likely introduce another China-US General Rate Increase to start September. A September 1st GRI would be the 6th in just three months, and could push East Coast rates beyond the $4000/FEU mark – a milestone not passed even in the frenzied lead up to the 2018 trade war. 

The surge in eCommerce may be one driver of the increase in ocean activity, with more signs of this spike’s impact across the supply chain surfacing this week…. 

UPS, FedEx and USPS announced rate increases as they work to handle the surge in volumes, and Amazon posted new warehousing and delivery requirements on its Fulfillment by Amazon sellers aimed at making sure it has enough space for the peak season push.