Mixed signals on transpacific: Spot rates still rising but bookings momentum stalls
US IMPORTERS rushed to bring in cargo from China after tariffs were slashed, but the bookings momentum has stalled, at least temporarily.
Data from Vizion for the week of May 26-June 1 shows that US bookings for imports from China were down 22% week on week (w/w) and are now flat year on year (y/y). US bookings for Chinese cargoes are now down 26% from the post-tariff-reduction surge in the week of May 12-18.
US import bookings from all countries showed a 16% w/w drop and a 3% y/y decline, with last week’s volume down 17% versus the peak week of May 12-18.
Vizion’s data covers 35%-65% of total US import bookings and 50%-60% of US imports from China. Bookings occur, on average, about two weeks prior to loadings, and Chinese exports take three to five weeks to arrive in the US.
The data implies a strong July for US ports due to the initial spike, but poses questions on how imports will trend thereafter, and how this peak season will compare to 2024’s, given negative pressure on US businesses from tariff costs that are still historically high.
Port congestion in July?
Concerns had been raised about US ports’ ability to handle the post-tariff-reprieve rush, although volumes have been manageable so far.
The Port of Los Angeles’ Signal Report shows higher expected volumes in the coming weeks — but not exceptionally high.
As of Thursday, Los Angeles was expecting imports of 112,555 teu in the week of June 15-21. While this is up versus prior weeks, it is a lower weekly volume than the port handled in the second half of April.
The latest update on North American port conditions from Hapag-Lloyd shows no significant delays at any US or Canadian terminals.
Sea-Intelligence warned in its latest report that port congestion could emerge next month if cargo demand keeps pace with capacity additions.
It said that carriers are adding 397,000 teu into the Asia-US west coast trade in July, up 16.5% versus deployments prior to the tariff reduction, and up 18% versus the same period last year.
“Either the surge in demand is less than expected, in which case the sharp injection will result in a strong rate reduction in the coming weeks, or the surge in demand will fill capacity, in which case there is a high likelihood of port congestion problems in July,” said Sea-Intelligence.
How high will spot rates rise?
Transpacific spot rates have surged in recent weeks, yet there is scepticism on how sustainable the gains will be.
According to Jefferies shipping analyst Omar Nokta, Asia-US west coast spot rates are nearing $6,000 per feu, “however, quotes for the second half of June indicate a moderation to the $5,000-$5,500 per feu range”.
The container rate surge could be nearing its peak, he added.
Peter Sand, chief analyst at Xeneta, predicted that recent increase “will not last because capacity is heading back to the transpacific and the desperation of shippers to get supply chains moving again will ease once boxes are on the water and inventories begin to build up.
“Spot rates are expected to peak in June before downward pressure returns,” said Sand.
The Shanghai Containerized Freight Index generally front-runs other spot rate indexes. The SCFI spiked last week, and right on cue, this was followed by large gains in Drewry’s World Container Index and Xeneta’s XSI-C index this week.
The WCI Shanghai-Los Angeles index shot up 57% in the week ending Thursday versus the week before, to $5,876 per feu. It has risen 117% over the past four weeks, but it is still down 2% year on year.
The WCI Shanghai-New York index rose 39% w/w to $7,164 per feu. It is up 96% over the past four weeks and is down 1% y/y.
Drewry said on Thursday that it “expects the supply-demand balance to weaken again in the second half, which will cause spot rates to decline”.
Xeneta assessed average short-term rates from Asia to the US west coast at $5,082 per feu on Thursday, up 63% w/w. The latest assessment is up 96% from May 12, when the US-China tariff reduction was announced, but is still down 14% y/y
Xeneta put average short-term rates from Asia to the US east coast at $6,160 per feu, up 48% w/w and up 65% from May 12, but down 11% y/y.
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