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China - US West Coast container rates slip below $1,000 per feu ahead of annual contracting

China - US West Coast container rates slip below $1,000 per feu ahead of annual contracting
US trade tariffs and the threat of a trade war are putting pressure container freight rates on the China – North America trade as lines head into all important negotiations for annual contracts.

China US – West Coast spot rates slipped to below $1,000 per feu for the week ending 23 March for the first time since June 2016. Based on the Shanghai Containerised Freight Index (SCFI) China – US West Coast spot rates were $945 per feu last week, while China US East Coast rates were $1,933 per feu.

Crucial Perspectives warned in a report that US trade tariffs would put pressure on China – North America spot rates in the near term.

Crucial Perspectives analyst Corrine Png said this, “does not bode well for the upcoming transpacific contracting season”.

“If spot freight rates continue to slide, the carriers are likely to be compelled to sign lower container freight rates for their annual contracts that typically run from 1 May.”

Putting further pressure on the recovering container sector the analyst has trimmed its 2018 container volume demand growth forecast to 4.2% down from 5.2% last year.

Importantly this means that supply growth will outstrip demand growth this year.

“This will fall short of the container shipping industry’s capacity expansion this year; we forecast global container shipping net capacity to grow 5.1% year-on-year in 2018 after taking into account vessel scrapping and delivery slippage,” Png said.