Premium Ocean Shipping Rates Fell 25% Last Week, Ports Still Clogged

New York, NY, November 15, 2021-The cost to move a container across the Pacific fell by more than one-quarter last week, the biggest decline in two years, reports the Wall Street Journal. This applies to premium, not contract buy, rates; most flooring importers don't buy at this premium rate. 

“The decline signals that the huge demand for Asian exports is easing, though shipping executives say it will be months before the logjam of ships outside of U.S. ports clears up.

“The decline in ocean-freight rates coincides with the winding down of the traditional peak shipping season, which starts in August when Western importers start to load up on cargo ahead of the year-end holidays. With most products at least on their way, space is gradually opening up on the front end of the trip, leading to lower prices.

“That easing hasn’t made its way to U.S. ports, where dozens of ships packed with everything from Christmas trees to electronics and heavy machinery are still waiting for weeks to unload at big gateways like Los Angeles and Long Beach, Calif. Shipping executives say they don’t expect the traffic to ease until February at the earliest.

“‘It could be months before the logjams ease, but if we don’t get more closures at ports, the volumes should become more manageable after Chinese New Year,’ said Lars Jensen, chief executive of Denmark-based Vespucci Maritime.

“The cost to move a container from China to the U.S. West Coast fell 26% last week compared with the week before to $13,295, according to the Freightos Baltic Index. That is still more than three times as high since the start of the year when the same box cost $4,200.

“Freightos head of research Judah Levine said it was the first decline since June in the premium cargo owners pay to secure space on ships.

“Analysts and freight forwarders said there are fewer ships with short-term charters sailing across the Pacific after wholesale inventories rose 13% year over year in September, according to the U.S. Census Bureau.

“Big importers such as Inc., Walmart Inc. and Home Depot Inc. account for around one-quarter of all imports that sail into the U.S. West Coast. They have been struggling to replenish their inventories since late July, when freight rates shot up more than 70% within a couple of weeks.

“Demand for ship space has been so high that some of these retailers chartered their own vessels to bring in cargo like decorations, gadgets and other hot-selling items before Christmas.

“‘The inventory numbers suggest that big retailers have stocked up and ordered early during the port delays,’ said Jonathan Roach, a container analyst at London-based Braemar ACM Shipbroking.”

Related Topics:U.S. Census Bureau