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Rates strengthen to US East Coast as shippers seek to avoid US West Coast

Some further strengthening was seen over the course of the week for trans-Pacific premiums as many US-based importers continued booking cargoes to the US East Coast, rather than face the uncertainty of labor negotiations on the US West Coast.

This has only served to fuel a currently worsening situation on the East Coast, with higher booking rates coming hand in hand with the unrelenting congestion at key USEC ports, headlined by Charleston with some 30 vessels waiting to birth.

This is a situation likely to get worse in the short term as more booked cargoes begin to arrive, adding fuel to fire.

“The premium market is starting to pick up again, especially given the diversification away from the US West Coast at this point,” said a US-based logistics provider. “The queues at US East Coast ports are starting to mount so it’s becoming quite tricky to move goods.”

Rates to the US West Coast for premium bookings were heard as high as $16,000/FEU, while the US East Coast still maintained a premium. Rates were heard for spot bookings as high as $17,500/FEU, not far off the peak seen towards the end of 2021, when rates were resting in the $20,000/FEU range.

As with other regions, the real issues in the market remain not with the ocean freight element, but with the inland logistics shortage. A lack of chassis and railcars are precluding importers to move their goods away from ports and towards inland distribution networks.

Premium rates weren’t only seen on the trans-Pacific however. The worsening situation at European ports with delayed cargoes has prompted some premiums to continue and even grow on trans-Atlantic routes.

“There are big delays in Europe at the moment so we are starting to see some premiums begin to come back for trans-Pacific,” said a US-based freight forwarder. “Not big levels, but people paying up to move goods quickly otherwise they’ll end up at the bottom of a growing stack.”

These premiums were heard in the $8,500/FEU region for North Europe-to-East Coast North America cargoes.

Southeast Asia market eyes port disruptions

The all-inclusive premium container rates were largely stable during the week ended March 25 as concerns of port disruptions, blank sailings and higher bunker fuel charges were partially offset by slower cargo movement in China, sources said.

The average freight for Southeast Asia to North America was heard at $17,000-$18,000/FEU for East Coast and $15,000-$16,000/FEU for West Coast, unchanged from a week ago but some quotes were offered with steep monthly increases, sources said.

“I received a quote from NVOCC for Philippines to Ohio at $22,500/FEU. Last month, it was at $20,826/FEU,” a US-based importer said.

The current geopolitical circumstances further pose a threat to market stability and may lead to higher rates, the importer added.

“While major ports in South China have resumed operations, the shortage of truckers is a looming concern as the various tests and checks may deter them from coming to Shenzhen to pick up containers,” a source based in Singapore said. “Shortage of truckers would again result in a shortage of empty boxes.”

The trucking service between Shenzhen and nearby cities may be impacted by 20% due to stricter road control and frequent Nucleic Acid Test, Danish carrier Maersk said earlier this week. “Consequently, there will be longer delivery times and a possible rise in transport costs such as detour fee and highway fee.”

Despite the terminals being operational, several carriers have been blanking sailings at major ports, leading to concerns of cargo backlog and long queues at ports, sources said.

The FAK rates on the route, however, remained stable during the week.

Platts Container Rate 25 — Southeast Asia-to-East Coast North America — was assessed at $10,500/FEU and PCR23 — Southeast Asia-to-West Coast North America — was assessed at $9,500/FEU March 25, both unchanged on the week.

Prices on the short-haul India-Middle East route were assessed higher this week due to rising bunker fuel costs and growing uncertainty in the supply chain.

PCR33 — West Coast India to the Middle East — was assessed at $2,300 FEU March 25, up $200 on the week. TCR33 — West Coast India to the Middle East – was assessed at $1,050/TEU, against $1,000/TEU in the previous week.

“Prices have been fluctuating around different routes. For India to the Middle East they are gradually moving up as more and more BAF adjustments are being introduced. Just recently, a $300 GRI has been implemented on reefer containers on the route,” a freight forwarder based in India said.

Source: Platts

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