Home » Breaking News, Maritime » Asia-US freight rates jump as volumes rebound

Long-term Far East-US container freight rates are now experiencing a boost, in line with the current strength seen in the short-term market, according to the Baltic and International Maritime Council (BIMCO).

Long-term rates from Asia to the US West Coast were the first to experience a jump following a long period of slightly declining rates, BIMCO said in a new analysis. Between September 30 and October 1, rates rose overnight to US$2,052 per forty-foot equivalent unit (FEU) from $1,496 per FEU, up $556 or a 37.2% jump.

While the rates have since fallen to $2,014 per FEU on October 13, this is still 44.1% higher than the rate of $1,398 per FEU recorded on the same day last year.

The Far-US East Coast rates experienced an even stronger increase, with long-term rates surging by $721 per FEU, from $2,412 per FEU on September 30 to $3,133 per FEU on October 1. Though long-term rates have also since declined, at $3,207 per FEU, they are still 25.7% higher than on the corresponding day in 2019, BIMCO noted.

In the first six months of the year, container volumes between the Far East and North America were down by 8.5%, or around 300,300 TEUs in absolute terms. But both July and August have recorded stronger volumes year-on-year. Compared to last year, container volumes were up by 180,000 TEUs and 280,000 TEUs in July and August, respectively. This has helped to pull the accumulated year-on-year growth rate up to -2.4%.

With these strong volumes, the Far East-North America trade is outperforming the rest of the world, which has seen global container shipping demand drop by 4.8% in the first eight months of the year. Worldwide, August is the first month to see higher volumes this year compared with the same month last year (+212,000 TEUs).

BIMCO noted that following an almost 15% drop in retail sales in April as a result of lockdown measures in the US, retail sales have since proved resilient. After the first eight months of the year, retail sales are now up 0.9% compared to last year.

The robust demand for goods means that container shipping into the US has been less affected than earlier suggested, as the industries suffering the most, such as services, are less reliant on trade. Retail sales, which are more trade dependent, have proven to be quite resilient.

Furthermore, the decline in imports in the first half of the year means inventories need restocking, and importers may be looking to frontload stock ahead of more potential disruption to supply chains from a second wave of COVID-19 cases.

Meanwhile, long-term rates from the Far East to Europe have increased more slowly and gradually, as they follow the case for spot rates as well. While Asia-US East Coast rates increased by $721 per FEU and Asia-US West Coast by $556 per FEU, long-term Asia-North Europe rates currently stand at $1,600 per FEU, or just $173 higher than on September 30.

Moreover, the recovery in volumes into Europe has been weaker compared to the Far East-North America recovery. Accumulated Far East-to-Europe volumes are down by 10.3% in the first eight months of the year, a loss of 1.2 million TEUs compared to the same period in 2019.

Photo by Nilantha Ilangamuwa on Unsplash

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