The cost of sea freight from Asia to the US is rising as container lines attempt to offset a drop in rates ahead of the so-called US ‘importing season’ in the autumn.
The average spot-market price to ship a 40-foot container from Asia to the US West Coast rose 34% over the past two weeks, to $1,659, according to Norway-based transport data firm Xeneta.
The Wall Street Journal reports that although this rate is still below the average price of $9,203 a year ago, it suggests “a rapid decline in pricing that began midway through 2022 as supply-chain snarls eased and retailers reined back restocking efforts may have bottomed out”.
Several ocean carriers imposed general rate increases of about $600 per container on the trans-Pacific trade earlier this month, and the higher costs that Xeneta and other shipping data groups have reported since then signal customers in general have been willing to pay higher rates on the sector’s spot market.
He added that the hikes “are the first from carriers in more than a year and come as the sector approaches the traditional peak shipping season this summer”.
Sea freight spot rate increase
The WSJ says the spot-market increases are “adding some urgency to importers’ preparations for the fall”.
It says many companies “have been delaying signing contracts for shipping later this year amid uncertainty over economic conditions and the prospects that rates could keep declining”.
To date this year, shipping demand has been depressed as retailers and manufacturers focus on paring back inventory levels after overstocking early last year.
Ports and trucking companies in the US have seen sharp declines in cargo volumes this year.
The WSJ says some freight companies are showing more caution about the prospects for “a rebound in the second half of the year as the US economy sputters amid high inflation and rising interest rates”.
It adds that big importers such as Walmart move most of their international freight under long-term contracts, which tend to be priced higher than spot-marked levels but which guarantee space on vessels.
It is smaller importers that rely on the spot market, or on contracts with third-party freight forwarders.