Spot container rates on the transpacific route fell this week after China's Golden Week holiday, with the market widely seen as marking the end of an extended peak season. Ocean carriers are meanwhile seeking to reverse the decline with FAK rate increases in the second half of October.
What Happened
According to Drewry's World Container Index (WCI), the spot rate on the Shanghai-Los Angeles route fell 3% week on week to $7,624 per 40ft, while the Shanghai-New York leg was down 2% to $10,220 per 40ft. A US west coast forwarder said the market had been basically static over the past week due to the holiday in China.
Spot rates on Asia-Europe routes fell for the 13th consecutive week. Xeneta's XSI showed the Far East-North Europe rate down 2.5% week on week to $3,645 per 40ft, while the Far East-Mediterranean route fell 5.9% to $4,007 per 40ft. The WCI's Shanghai-Rotterdam route fell 2% to $3,337 per 40ft, while Shanghai-Genoa was essentially flat at $3,696 per 40ft.
Unsolicited rate quotes from Chinese forwarders seen by media offered $2,650 per 40ft for shipments from China to the UK ports of Felixstowe and Southampton.
Background
Peter Sand, chief analyst at Xeneta, said European shippers are in the middle of tender season, and falling short-term rates are a welcome development for long-term contract negotiations, as long-term contracts are benchmarked against the short-term market. He noted that demand has been strong all year, especially into Europe, but double-digit growth could not continue indefinitely; as demand eases from a very high level, the fight for capacity eases too, and forwarders are getting better deals from carriers in long-term contract negotiations.
Sand added that Far East-Europe spot rates have fallen heavily since the post-Hormuz crisis peak in July, with the Mediterranean down 43% since July 1 and North Europe down 34%. Drewry noted that the next two to three weeks will likely determine pricing for the remainder of the year, with carriers seeking higher FAK rates in late October, but the faster-than-expected return to the Suez route remains the biggest threat to carrier efforts to support rates.
Impact on Shippers
For Chinese exporters shipping to the US, the decline in spot rates offers some relief on short-term booking costs, with both west coast and east coast routes seeing modest drops. However, carriers plan FAK rate increases in late October, and if implemented, shipping costs could rise for late-October and November sailings, so shippers should watch quote validity periods and surcharge changes.
On customs clearance and transit times, the post-Golden Week market recovery typically brings a concentration of cargo, which could cause temporary queues for container pickup at US west coast ports and inland trucking, potentially affecting last-mile transit times. Drewry also warned that some increases may come through surcharges rather than base rates, including fuel surcharges, so shippers should verify each item when checking invoices.
Recommendations
Shippers are advised to lock in rates and space for sailings before late October while spot rates are relatively low, and to specify surcharge caps and rate adjustment triggers in contracts. They should also confirm container pickup and trucking timelines at US west and east coast ports with their forwarders, and build buffer time into last-mile planning to avoid delays from concentrated cargo volumes at the tail end of the peak season.