The Drewry benchmark rate for shipping from Hong Kong to Los Angeles has fallen to its lowest level since December 2011.The spot rate was reported at $1,650 after a fourth straight week without gains. The four-week tumble — which included a week with no change — has reduced the rate a total of $350 per FEU since late May. The spot rate is the lowest it’s been in over two years.
“Drewry’s Hong Kong-Los Angeles container freight rate benchmark this week slid 6 percent to $1,650 per 40 ft [container], indicating that the mid-June PSS was not accepted by the market,” Drewry said. “The benchmark is now at its lowest since December 2011 and is likely to fall further without capacity reduction.”
Transpacific Stabilization Agreement members had planned a peak-season surcharge of $400 per FEU, which was set to kick in this week, but as Drewry noted the PSS has not led to an increase in spot rates.
The overcapacity problem could be linked to labor negotiations at West Coast ports. The International Longshore and Warehouse Union and the Pacific Maritime Association are still in negotiations, with 11 days left on the current contract. Shippers sped up cargo to the West Coast ports to get ahead of potential work slowdowns or stoppages, but the demand has slowed in recent weeks.
The SCFI rate from Asia to the U.S. West Coast dropped 2.3 percent last week to $1,761 per 40-foot container. That rate per FEU was $41 dollars lower than the week before, and down 6.1 percent year-over-year.
This week’s Drewry benchmark spot rate is 15.7 percent or $307 per FEU lower year-over-year. The spot rate from Hong Kong to Los Angeles has dropped 12.5 percent or $236 per FEU since Jan. 1.
