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East, west coast trans-Pac spot rates notch first, dual 2018 rise    05/02/2018
Spot rates on imports from Asia increased 3 percent to the East Coast and 6.5 percent to the West Coast this week, the first time this year that spot rates increased to both coasts.

Retailers continue to restock their inventories and order merchandise for the spring shopping season at a measured pace. Photo credit: Shutterstock.

The modest increase — two weeks before  Lunar New Year when factories will close for a week or two — indicates that retailers are restocking their inventories and preparing for the spring shopping season at a measured pace.

The cost of shipping a 40-foot container from Shanghai to the East Coast was $2,843, up from $2,761 last week, and the West Coast rate was $1,552, up from $1,457 per 40-foot equivalent unit container last week, according to the Shanghai Containerized Freight Index published under the Market Data Hub on Joc.com.

Retailers continue to restock their inventories and order merchandise for the spring shopping season at a measured pace. Therefore, spot rates remain healthy, but not overheated.

Some carriers in the eastbound Pacific had announced general rate increases for mid-month January and others for Feb. 1. This week’s slight rate increase indicates some portion of the GRIs was enforced. If advance bookings for the next two weeks signal that ships will fill up, additional rate hikes are possible. After the final pre-Chinese New Year shipments leave Asia in mid-February, rates will most likely begin a descent whose magnitude will be determined by the strength of consumer spending this spring.

Global Port Tracker, which is published monthly by the National Retail Federation and Hackett Associates, projects a 2.3 percent decline in March compared to March 2017, a 3.3 percent increase in April and a 0.4 percent increase year over year. Last year March was strong because Chinese New Year occurred earlier, so factories had ramped up production by March.

The spot rates in early 2018 continue to lag noticeably from 2017. The East Coast rate this week was down 21.9 percent and the West Coast rate was 25.8 percent lower than during the same week last year, when the Pacific trades were still adjusting to the loss of Hanjin Shipping Co. Hanjin filed for bankruptcy protection on Aug. 31, 2016, reducing total capacity in the trade by 7 percent. Also, the market was marked by uncertainty with the pending shotgun start of three new vessel-sharing alliances on April 1, 2017.

The higher rates of early 2017 began to slip after Lunar New Year last year, so comparisons later this spring will be benchmarked off of 2017 rates that would be considered average spot rates for the spring and summer months.

 




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