Retailers and brands are seeing more relief when it comes to the price of their ocean cargo bookings out of Asia, as spot freight rates remain on a downward spiral.
As of Thursday, trans-Pacific spot rates fell to both U.S. coasts this week, with cargo going from Shanghai to Los Angeles down 5 percent to $2,675 per 40-foot equivalent unit (FEU), according to Drewry’s World Container Index (WCI). Containers on the Shanghai-to-New York route were down 7 percent to $4,210 on average.
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Shanghai Containerized Freight Index data released Friday shows similar declines of 3.5 percent to $2,067 per FEU for U.S. West Coast-bound boxes. Cargo headed toward the U.S. East Coast saw 6.5-percent price dips to $3,378 per FEU.
Rates have fallen consistently since they peaked in early June after a massive run-up the month prior. In May, rates soared on the trans-Pacific trade lane, when the U.S. and China first agreed to reduce their respective tariffs for 90 days and bookings for Chinese imports accelerated.
The collapse in the nearly two months since has been significant. For cargo headed to Los Angeles and Long Beach out of Shanghai, spot rates are down nearly 55 percent from June 12, while the freight headed to New York saw a price plunge of 42 percent.
With the trade negotiation deadline for U.S. tariffs on Chinese goods set for Aug. 12, container shipping lines are cutting back on services across the Pacific by cancelling more sailings.
Approximately 175,000 20-foot equivalent units (TEUs) of container capacity is set to be blanked during July, according to data from maritime intelligence provider eeSea, totaling 11 percent of deployed capacity between Asia and the West Coast.
Drewry projects blank sailings to rise 59 percent from 29 to 46 between weeks 30 and 34, underscoring the attempts by carriers to balance supply with the market demand.
In another instance that may give shippers less inclination to make imminent cargo bookings, Treasury Secretary Scott Bessent said Tuesday that the U.S. and China are likely to extend the August tariff deadline.
Container shipping firms have tried to keep rates up via general rate increases (GRIs) on the trans-Pacific eastbound route, but even those spikes haven’t been able to outpace the dip in capacity and overall demand.
Cosco Shipping, Evergreen, Hapag Lloyd and HMM applied a $3,000 base freight rate GRI per 40-foot container on July 15, while CMA CGM, Yang Ming and ZIM set their GRI at $2,000. Ocean Network Express (ONE) had the lowest GRI at $1,000.
The same rates are expected to be implemented Aug. 1.
Drewry expects spot rates on the trans-Pacific trade lane to continue declining next week.
For the longer term, the supply-demand balance is expected to weaken globally in the second half, which would further contribute to worldwide spot rate declines, according to Drewry’s July Container Forecaster.
Two factors will impact the volatility and timing of those rate changes, Drewry says: Trump’s future tariffs and capacity changes related to the introduction of fees on Chinese ships docking at American ports.
The volatility also comes amid the expectation of a peak shipping season that came and went earlier than usual due to the tariff whiplash.
According to the Global Port Tracker from the National Retail Federation (NRF), August will see an 11.8 percent decline in cargo entering U.S. ports compared to July and a 10.4 percent collapse over the year prior.
From August to November, total inbound cargo volume is expected to sequentially fall every month, the Global Port Tracker says, in another indicator that fewer ships are likely to be sailing on the China-to-U.S. trade lane—further contributing to declines in freight prices.
Although ships on that route may be set for a decline, the overall increase in ships out at sea are another factor in depressing the rates.
Global container ship capacity has risen by 2.43 million TEUs in the last 12 months, registering a growth of 8.1 percent year over year. In that time, 2.48 million TEUs of new vessel deliveries were added against just 50,000 million TEUs that were scrapped, according to data from Linerlytica.
