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Carriers pull back on trans-Pac rate hikes after Chinese ministry comments    16/09/2020
Spot rates in the eastbound trans-Pacific have increased week after week since late June when US imports from Asia began to surge

Cosco Shipping and OOCL have suspended planned Sept. 15 general rate increases on the eastbound trans-Pacific trade while other major container lines are pushing forward with GRIs that are slightly lower than they had announced.

The suspension and weakening of GRIs comes after Chinese regulators on Friday encouraged major container lines to add capacity and be less aggressive in raising their rates as US imports from Asia continue to increase. Excluding Cosco Shipping and OOCL, both controlled by a Chinese holding company, carriers reduced GRIs by $100-$250 per FEU from their original plans, container lines and non-vessel-operating common carriers tell 

The sources who spoke with -- two from non-Chinese carriers and five from NVOs --  did not want to be identified. The carrier sources were uniform in their response to the suggestions made last week by Chinese regulators: Government entities or regulators shouldn’t interfere in the free marketplace.

“This sets a dangerous precedent,” one liner executive said. He noted the Chinese Ministry of Transportation and Communications did not get involved in pricing at times when spot rates were sinking rapidly.

Rate sheets that NVOs shared with show that most carriers in the eastbound trans-Pacific are posting GRIs of about $50-$100 per FEU to the West Coast, and slightly higher to the East Coast, effective Sept. 15. This week’s rates are in the range of $3,900 to the West Coast and $4,700 to the East Coast, according to another executive with a European carrier.

The West Coast spot rate on Friday was $3,813 per FEU, while the East Coast rate was $4,534 per FEU, according to the Shanghai Containerized Freight Index that is published in the JOC Shipping & Logistics Pricing Hub. Spot rates have been setting records almost each week since late June, when US imports from Asia began to surge as the economy reopened from lockdowns implemented at the outset of the coronavirus disease 2019 (COVID-19).

Nearing $4,000 per FEU to West Coast

Carriers had prefiled GRIs with the US Federal Maritime Commission that would have increased the spot rates above $4,000 to the West Coast and $5,000 to the East Coast. Since those levels will most likely not be reflected in the SCFI posting on Friday, attention is now turning to GRIs that carriers have pre-filed for Oct. 1, an NVO source said.

The second carrier source said the rate increases that liner companies are seeking are transparent and reflect current market conditions, which are expected to last at least through October, regardless of what any government entity is saying.

“This is a strong market. Our rates are fair and explainable. They reflect supply and demand,” the source said. He added: “We don’t like to see governments interfere with the market.”

Carriers and NVOs say they would not be surprised if rates in the eastbound trans-Pacific continue to increase into October as manufacturers rush to move their shipments out of China before factories close for the Golden Week holiday Oct. 1-7. Carriers have announced several blank sailings for the weeks of Oct. 11 and Oct. 18, although capacity to the West Coast will still be about 9.5 percent higher than for Golden Week 2019, and about 12 percent higher to the East Coast, according to the Sunday Spotlight published by Sea-Intelligence Maritime Analysis.


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