Date from digital freight forwarder Shifl showed that China – Los Angeles freight rates plummeted $9,000 per feu, or 51.4%, between September and October. It said spot rates on the transpacific trade route had dropped to $8,500 per feu compared to a high of $17,500.
For the China – US East Coast spot rates also fell for the period although by a lesser level of 28.2% in one month to a rate of $14,000 per feu compared to a high of $19,000 per feu, according to Shifl.
The sharp drop was attributed to Chinese factory output being hit by power outages as the country experiences coal shortages leading to power cuts. The first week of October is the week-long Golden Week holiday in China, a traditional lull in shipping markets, as manufacturers shut up shop for a seven-day period.
Stifl Shabsie Levy, Founder, and CEO, commented that even with lower rates for shippers, manufacturing disruption could mean they struggle to find product to put in containers.
The lower spot rates, which are still many times higher than the $1,500 per feu shippers paid pre-pandemic, could be short-lived as Chinese manufacturing woes create a new wave of disruption.
“However, this temporary reprieve could soon be overshadowed by a growing backlog of unfulfilled orders. Chinese energy rationing policies and the impact of Covid-19 shutdowns are throttling factory output meaning that US and EU manufacturing orders are not being filled on time,” Shifl said.
“While US and EU businesses scramble to diversify their supply chains, inventory shortages and price increases will become more pronounced.”
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