SHIPPING: Global container rates moderate, decreases seen on Asia-S America trade lane

HOUSTON (ICIS)–Average global rates for shipping containers moderated this week, and market players in Latin America have even seen decreases in costs from Asia, but rates to the US East Coast are likely to remain elevated as deployed capacity remains tight.

Rates on the World Container Index (WCI) from supply chain advisors Drewry edged higher by 1% over the week, as shown in the following chart.

Rates from Shanghai to the US East Coast rose by 2.5% over the week while rates from China to the US West Coast rose by less than 1%, as shown in the following chart.

Drewry expects freight rates to remain high until the end of the peak season.

Rates from online freight shipping marketplace and platform provider Freightos are slightly higher to the West Coast and slightly lower to the East Coast when compared with Drewry’s assessments.

Judah Levine, head of research at Freightos, said the convergence of peak season demand, strained capacity on continued diversions away from the Red Sea and Suez Canal, and congestion at Asia ports are keeping upward pressure on rates.

Kyle Beaulieu, senior director and head of ocean Americas at Flexport, said in a webinar this week that congestion has eased a bit over the last month at key Asian ports, especially Singapore.

But still, Beaulieu said deployed capacity was 91% in June and 94% so far in July.

He said general rate increases (GRIs) were largely successful for 15 June and 1 July, but that GRIs set to take effect on 15 July have been cancelled.

He said there are no real signs of relief for the Asia-USEC trade lane as capacity is expected to remain tight.

For the near term, he expects the Red Sea diversions to support higher rates, and those higher rates to continue being spread across all trade lanes.

A trader told ICIS this week that it is seeing softer rates from Asia to South America.

Rates from Asia to South America were flat to lower this week according to ocean freight rates analytics firm Xeneta and as shown in the following charts.

Additional reporting by Bruno Menini