Carriers implemented only 3 percent of their general rate increases (GRIs) scheduled for August 1 on the eastbound trans-Pacific trade because of a soft market, according to the latest Drewry Container Freight Rate Insight report.
The latest Drewry Hong Kong-Los Angeles container rate benchmark increased by just 3 percent to US$2,452 per 40-foot equivalent unit (FEU) last week after carriers failed to carry through their announced US$500 per FEU rate increase for this month.
Martin Dixon, Drewry’s research manager for freight rate benchmarking, said there were two factors for the apparent failure to fully impose last week’s GRIs. “Carriers are staggering the implementation of this month’s GRI so further rate recovery is to be expected over the next 10 days.
“But it also reflects the weak state of the market as soft demand growth and insufficient capacity correction weighs on rates. We expect freight rate levels to drift back downwards through the latter part of August.”
However, freight rates remain high by historical standards. For instance, the current benchmark spot rate is now 44 percent above the 2011 full year average and 40 percent higher than the 2006-2011 historical average rate.
Dixon cautioned: “While we expect further reduction in eastbound transpacific spot rates through the remainder of the year, importers and exporters will have to consider the impact of any big increase in spot rates between late 2011 and late 2012 on contract rates for 2013 and adjust their negotiation strategy accordingly.”
Photo: Michael David Pedersen
