Trans-Pacific rates still sinking. Trans-Atlantic rates still peaking

a photo of a container shipping port in Bremerhaven

It’s a tale of two oceans: The price to ship containers of cargo from Asia to the U.S. across the Pacific continues to recede from record levels. In contrast, the price to ship containers across the Atlantic from Europe has risen through 2022 and is still hovering near all-time highs.

Vessel backups remain historically severe off Savannah, Georgia, New York/New Jersey and Houston, whereas conditions have dramatically improved off Los Angeles/Long Beach. Reduced congestion is a negative for spot pricing. Thus, Asia-West Coast rates are falling faster than the Asia-East Coast rates.

The East Coast port congestion that’s tying up ships arriving from Asia via the Panama Canal is simultaneously soaking up capacity heading west from Europe. Trans-Atlantic vessel capacity is much more limited than in the trans-Pacific, with the balance remaining in favor of shipping lines — even more so due to congestion. Consequently, trans-Atlantic spot rates remain historically strong.

Trans-Pacific prices continue to slide

Some spot indexes showed trans-Pacific spot rates temporarily plateauing earlier this month. However, they’ve since resumed their gradual slide.

Drewry’s weekly assessment for Shanghai-Los Angeles fell 5% in the week reported on Thursday, to $6,521 per forty foot equivalent unit. That’s down 41% y/y. Drewry’s Shanghai-New York assessment fared better. It was flat last week, at $9,710 per FEU, down 28% y/y.

chart showing spot rates
Blue line: Shanghai-L.A. spot rate in $ per FEU. Green line: Shanghai-New York (All charts: FreightWaves SONAR)

The Freightos Baltic Daily Index (FBX) Asia-West Coast assessment fell to $5,533 per FEU on Friday. That’s its lowest level in 15 months and down 70% y/y. (FBX includes premium surcharges in its trans-Pacific assessments. Because premiums were very high a year ago and are no longer charged, the FBX index declined much more steeply than Drewry’s.)

The FBX Asia-East Coast assessment was at $9,150 per FEU on Friday, down 54% y/y. Pricing trends continued to diverge over the past month, with the East Coast index shedding 7% of its value and the West Coast index dropping 21%.

chart showing spot rates
Spot rate changes over past month. Blue line: China-East Coast. Green line: China-West Coast

Trans-Atlantic rates stay high after rise

European services call at East Coast ports mainly from Le Havre, France; Bremerhaven, Germany; Antwerp; Belgium; London, U.K.; and Sines, Portugal. Mediterranean services mainly serve the East Coast after stops in Algeciras and Valencia, Spain.

According to the indexes, it is now more expensive to move spot cargo westbound across the Atlantic from Europe to the East Coast than it is to move cargo eastbound across the Pacific from Asia to the West Coast — even though the sailing distance across the Pacific is almost twice as long.

Drewry’s latest weekly assessment for the Rotterdam-New York route was $6,936 per FEU, up 7% y/y.

The FBX Europe-East Coast index was at $8,522 per FEU, up 44% y/y. 

chart showing container rates
Blue line: FBX Europe-East Coast daily rates over past year. Green line: Drewry Rotterdam-NY weekly rates

Drewry’s assessment is just below highs hit in early May, while the FBX is around the sustained high it has been at since May, with the exception of a brief one-off spike in early June.

Rates still almost 5 times pre-COVID levels

Even with spot rates falling on most global routes save the trans-Atlantic, freight pricing remains exceptionally profitable for ocean carriers. Furthermore, shipping lines have at least half of their volume on contracts. According to multiple carriers, annual contract rates are in the vicinity of current spot rates.

Highlighting just how profitable this remains for carriers, rates are far above where they were pre-COVID. Trans-Pacific and trans-Atlantic spot rates have gone in opposite directions over recent months, but when compared to pre-pandemic levels, they’ve taken different paths to the same result.

As of Friday, the FBX Europe-East Coast index was 4.9 times higher than it was three years ago. The FBX Asia-West Coast index — despite a significant drop since hitting record levels — was also 4.9 times higher than it was three years ago.

Blue line: Change in FBX Europe-East Coast spot rates vs. Aug. 20, 2019. Green line: change in FBX Asia-West Coast rates

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Source: freightwaves - Trans-Pacific rates still sinking. Trans-Atlantic rates still peaking
Editor: Greg Miller