Container rates on trans-Pacific routes jumped over the first few days of April as increases sought by carriers at the end of March gained some traction.
This bullish move comes ahead of May, when demand typically picks up for global container shipping, with some shippers keen to move cargoes ahead of this spike in demand and the associated rate increases typically seen.
Platts Container Rate 13 North Asia to West Coast North America was assessed at $1,575/FEU Tuesday, compared with $1,250/FEU on March 29.
Some carriers had been eyeing General Rate Increases to as much as $1,650/FEU along this trade lane and although these expectations have not quite been met, rates are significantly higher than at the end of March.
“Trans-Pacific rates are performing quite well at the moment, especially in comparison to Asia-Westbound routes. The GRIs for the start of the month have stuck in the market,” said a carrier source Tuesday.
Freight rates for trans-Pacific routes had been under significant pressure since late January, when rates slumped ahead of Lunar New Year, and the market was slow to recover.
Rates for PCR 13 were assessed at $2,100/FEU on January 22, two weeks before the Lunar New Year, but an increase in the amount of spare capacity and weaker export demand on trans-Pacific routes led to a steady decline in rates.
Following the return of North Asian export demand to the market through the middle of March, capacity utilization rates increased, and are now in the low-to-mid 90% region for trans-Pacific lanes.
PCR5, North Asia to East Coast North America, has followed a similar path to PCR13, reaching $2,575/FEU Tuesday, compared with $3,100/FEU on January 22, the highest point this year.
This strengthening compared with March has come despite largely stable bunker prices, with Platts Bunker Charge 13 North Asia to West Coast North America strengthening $6.34/FEU between March 29 and Monday’s $334.38/FEU assessment.
But bunker fuel prices strengthened overall in the first quarter of 2019, buoyed by a stronger crude complex, increasing $35.57/FEU or 11.9% along this lane since the all-inclusive freight rate high on January 22.
Platts Bunker Charge 5 North Asia to East Coast North America rose $12.97/FEU or 2.4% between March 29 and $543.03/FEU on Monday, reflecting an increase of $46.18/FEU or 9.3% from January 22.