Container Freight Rates To N America From N Asia Trump Southeast Asia In A Rare Flip
Spot container freight rates from North Asia to North America have surpassed those from Southeast Asia to North America in an atypical market situation, S&P Global Platts data showed.
For the last several months, prices from Southeast Asia to North America have been higher than those from North Asia, for a variety of reasons including decreased container availability and severe congestion issues at key transshipment ports in Southeast Asia.
In East Coast North America, it’s currently $450/FEU cheaper to ship from Southeast Asia than from North Asia. Prior to the flip, the Southeast Asia to East Coast North America freight rate was higher than the North Asia to East Coast North America freight rate, by around $100-$150/FEU in April. In March, the spread had peaked at $250/FEU.
The Platts Container Rate 25 (PCR 25)–Southeast Asia to East Coast North America was assessed at $5,450/FEU on May 6, an all-time high since the assessment was launched earlier this year. On the same day, PCR 5–North Asia to East Coast North America– was assessed at $5,900/FEU, up $700 on the month.
Similarly, shipping from Southeast Asia to West Coast North America is about $150/FEU cheaper than from North Asia. PCR 23 — Southeast Asia to West Coast North America — was assessed at $4,550 per FEU on May 6 while PCR 13 — North Asia to West Coast North America — was at 4,700/FEU.
In the North Asia to North America trade route, May 1 general rate increases, or GRIs, supported the spot freight rates, but the GRIs have not yet been pushed for Southeast Asia to North America route. Sources, however, say that carriers have imposed peak season surcharges, or PSS, on the latter route and have also announced a PSS of $1,000 per FEU, effective June 1.
With the recently imposed PSS, prices for Southeast Asia to East Coast North America and West Coast North America route have risen by $100 over the last two weeks. This still pales in comparison to the surge on North Asia to West Coast North America, which is nearly seven times higher at $700/FEU.
While there has been a huge rush of cargo from North China before the US Labor Day holiday in May, sources based in Southeast Asia say the demand has been stable and many shippers are even switching to airfreight because of higher reliability.
“The customers have changed their strategy, they are now bringing their cargo in small quantities to reduce liability,” a source based in Singapore said.
For North Asia to US trade, sources expect firm demand to continue while equipment shortages may worsen in the second half of May. “As we move forward in May, this could become a bigger challenge for the industry and ourselves,” a carrier source said. “We handled it pretty well in April, but we’ve started to become a little tight in certain areas.”