Asia-US container spot rates keep rising amid more blank sailings

Container spot rates from Asia to the US West Coast continued to move higher last week, though forwarders caution that despite a ramp-up in blank sailings that began last month to thin capacity, the rally that began in June may still be short-lived Retailers and forwarders are bracing themselves for another general rate increase (GRI) this week in the eastbound trans-Pacific, although they say spot rates will likely then hit a ceiling of about $2,000 per FEU to the West Coast that will carry the Asia-US trade into October.

Spot rates have more than doubled since June, owing to a seasonal increase in import demand and labor-related supply chain disruptions, but mostly because carriers have managed capacity by aggressively canceling — or blanking — sailings, according to industry analysts.

According to Sea-Intelligence Maritime Analysis, in July, carriers blanked nearly 20% of total capacity to the West and East coasts of North America.

The Asia-West Coast spot rate as of Aug. 14 was $2,150 per FEU, highest since October, according to Platts, which, like the Journal of Commerce, is owned by S&P Global.

Spot rates have been pushed higher by seasonal demand for merchandise, draft restrictions on the Panama Canal, cargo-handling disruptions in Vancouver and Prince Rupert during recent labor contract negotiations, and most importantly, blank sailings.

"Carriers "across the board" have announced another round of GRIs effective this week, Bennett said, filing for increases of $1,000 per FEU.

Spot rates from North Asia to US rise sharply into August

A good indication that carriers feel confident about their ability to get another GRI to stick is that they are strictly holding customers to their cargo allocation limits, Bennett said.

A shipper's or forwarder's allocation is its total annual minimum quantity commitment (MQC) divided by 52. This spring, when import volumes were weak, carriers provided as many container slots as customers sought, even if the number exceeded a customer's weekly allocation, Bennett said.

However, beginning about two or three weeks ago, carriers began enforcing allocation limits contained in service contracts.

Spot rates hitting "ceiling" 

August is forecast at 2.03 million TEUs, down 10.2% year over year, but the first month since last October to reach 2 million TEUs," the Aug. 7 GPT said. That means import volumes should peak in August through October and fall off in November and December, which would put a lid on spot rates.

In his Aug. 1 earnings call, Matson Navigation Co. chairman and CEO Matthew Cox said that compared to peak season 2022, the trans-Pacific trade will experience a "muted peak season" this fall.

The global order book capacity is close to 30% of the active fleet at more than 7 million TEUs, according to maritime consultancy Drewry. About 2.5 million TEUs of capacity is scheduled for delivery by the end of this year, with 3 million additional TEUs scheduled for delivery in 2024, Drewry says.

The influx of large new container ships, mostly on the Asia-Europe trade, will have a cascading effect as somewhat smaller vessels serving that trade will move to the trans-Pacific and other trade lanes.

Read more: