Latest news with #SCFI
Yahoo
3 days ago
- Business
- Yahoo
Trans-Pacific Ocean Freight Rates Continue Their Ascent on More Front-Loading
Trans-Pacific ocean spot freight rates have kept their foot on the gas in the wake of a rush of imports from China into the U.S. as trade and tariff uncertainty pervades between the countries. On Friday, the Shanghai Containerized Freight Index (SCFI) calculated a surge of nearly 31 percent from the week prior out of the Chinese city across all markets, with West Coast-bound spot rates skyrocketing 58 percent to $6,243 per 40-foot equivalent unit (FEU). Rates soared 46 percent to $5,172 per container headed to the East Coast. More from Sourcing Journal How Should Brands Think About Cross-Border E-Commerce Amidst Uncertainty? As CMA CGM Flirts with Red Sea Comeback, Will Others Follow Suit? Can Tech Plug the Gaps Between Immigration Policies and Reshoring Aspirations? The weekly 30.6 level gain to 2,072.71 points represents the second-largest individual gain tracked by the index, following the final week of December 2023 as ocean carriers began avoiding the Red Sea en masse. Abercrombie & Fitch is one apparel retailer that has already baked in higher freight costs for their second quarter, chief financial officer Robert Ball said in a Wednesday earnings call. All the major indices that monitor ocean freight rates have indicated significant jumps to close out May, with the SCFI showing the highest increases. According to Drewry's World Container Index (WCI) posted Thursday, freight rates from Shanghai to Los Angeles leapt 17 percent to $3,738 per FEU in the past week and 38 percent since May 8. Spot rates to New York have risen 14 percent in the past week to $5,172 per container, and have accelerated 42 percent in the past three weeks. These numbers buoyed the overall WCI to 10 percent growth to $2,508 per container, marking the first double-digit rise in the composite index since last July. For Freightos, Asia-to-U.S. West Coast prices increased 13 percent to $2,788 per FEU, according to data revealed on Wednesday. The Freightos Baltic Index (FBX) bucked the trend of the other benchmarks, with Asia-to-U.S. East Coast prices seeing a bigger jump than their West Coast counterpart. Spot freight rates per container increased 20 percent to $4,223. 'Surging demand and these restrictions on capacity from out of place vessels and port congestion [at Chinese ports] are putting significant upward pressure on container rates,' said Judah Levine, head of research at Freightos, in Wednesday's weekly update. 'Rates are at their highest level since late February, and GRIs announced through mid-June could push prices up thousands of dollars more if demand stays elevated and congestion remains an issue.' Ongoing front-loading of imports will lead to big increases in spot rates on June 1, according to data from Xeneta. 'Average spot rates will rise at least 18 percent from the Far East to U.S. West Coast and 14 percent into the U.S. East Coast,' said Emily Stausbøll, senior shipping analyst at Xeneta. 'Data is being received from shippers paying far higher rates than this, so the market has the potential to increase even more dramatically in early June.' While a June spike could be in order, the combination of importers' front-loading and ocean carriers moving more shipping capacity to the trans-Pacific trade lane could be what slows rates down in the second half of 2025. Drewry's Container Forecaster expects the supply-demand balance to weaken again in the latter six months, which would cause spot rates to decline again for the back half. But the volatility and timing of rate changes will depend on the outcome of the ongoing legal challenges to President Donald Trump's tariffs and on possible capacity changes related to the introduction of the U.S. port docking fees on Chinese ships, which are uncertain. Xeneta's Stausbøll projects a longer-term decline in the third quarter as well, particularly when the expected period of front-loading ends. 'While tariffs are lower, they are still higher than they were previously, so there is every likelihood this will subdue consumer demand,' Stausbøll said in a May 21 blog post. 'Once shippers have built up inventories, they will not continue to front-load imports. Demand will therefore ease and carriers will once again be struggling to fill their ships. This means the traditional Q3 peak season will arrive earlier in 2025, but it should not take too long for spot rates to soften and continue the downward trend seen during Q1.' Currently, the base tariff rate on the majority of Chinese products is 30 percent after the U.S. and China entered into a 90-day tariff rollback. The agreement lowered the tariff rate from 145 percent for U.S. importers until Aug. 14. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
21-05-2025
- Business
- Yahoo
Trans-Pacific Freight Rates Soar as China Cargo Bookings Rebound
The 90-day reduction in tariffs on Chinese imports have sent bookings out of the country soaring almost immediately—and ocean spot freight rates are following suit. Numerous indices tracking rates on the trans-Pacific trade lane are seeing abrupt spikes in the cost to move cargo out of China toward to the U.S. More from Sourcing Journal US Footwear Manufacturers Tell Trump Tariffs Should Fund Onshoring Resurgence Trump Says US Will Set Tariff Rates For Trade Partners Canada Cools US Trade Tensions By Drawing Down Retaliatory Duties The Shanghai Containerized Freight Index (SCFI) released Friday said deliveries from Shanghai to U.S. West Coast ports soared 32 percent from the week prior to an index rate of $3,091 per 40-foot container. The Shanghai-to-U.S. East Coast route saw a healthy 22 percent week-over-week jump to $4,069. Drewry's World Container Index (WCI) saw weekly Shanghai-to-New York sailings take the highest growth rate at 19 percent to $4,350 per 40-foot container (FEU), while trans-Pacific routes reaching Los Angeles shot up 16 percent to $3,136 on average. For Drewry, both routes buoyed the total WCI composite across eight major East-West trade lanes, which increased 8 percent from the week prior, to $2,233 per container. Xeneta's newest data released Friday had Far East-to-U.S. West Coast average rates reaching $2,722 per FEU, with average East Coast-bound rates at $3,883. 'There is no time to waste for these shippers and the rush of cargo will put upward pressure on spot rates on trans-Pacific trades,' said Peter Sand, chief analyst at Xeneta, in a weekly update. 'Spot rates will peak and then flatten as carriers redeploy capacity to match demand, then rates will begin to slide again just as we saw in Q1. This is expected to happen over the next two to four weeks.' With rates naturally increasing due to the quick turnaround in ocean freight demand, container shipping liners no longer have to resort to artificially propping yields up by cutting capacity via methods like blank sailings or vessel swapping. According to Drewry's container capacity insight online tool, blank sailings from Asia to the West Coast of North America will decrease 28 percent month-on-month from 33 in May to 24 in June. The number of blank sailings from Asia to the East Coast of North America will decrease from 23 in May to 17 in June, a 23 percent drop. This will result in double-digit increases (or returns) of ship capacity to these trades, after the recent cuts. 'It is a feature of the current volatile macro-environment that ocean carriers are 'cancelling cancellations' of sailings,' Drewry said in a post on LinkedIn. 'We notice that the container shipping market is reacting to trade policy announcements with swings in trade volumes, capacity volumes and spot prices, similarly to the stock market.' CMA CGM, which saw freight bookings for China exports to the U.S. get cut by 50 percent after President Donald Trump began his escalation of tariffs on April 3, is another ocean carrier seeing the quick rebound in bookings. 'Trade will restart on this route very, very vigorously in the coming weeks and months,' said CMA CGM chief financial officer Ramon Fernandez during a first-quarter earnings call, calling the duty rollback an 'indisputably positive signal for maritime transport.' 'Everyone is expecting trade in June to be much more active than was feared just a few days ago,' said Fernandez. The carrier, which plans to invest $20 billion into the U.S. throughout Trump's presidency, posted a 12.1 percent increase in revenue to $13.3 billion in the first quarter on net income of $1.1 billion. Volumes carried ticked up 4.2 percent to 5.85 million 20-foot equivalent units (TEUs). Additionally, the French shipping conglomerate gave more color on the anticipated U.S. port docking fees on Chinese ships, with Fernandez indicating 'we will organize ourselves in order not to have to pay these fees.' He added that less than half of the company's 670 vessels were built in China. Fernandez said Ocean Alliance partners including China's Cosco Shipping and would adapt to the fees, although he did not say what the wider impact would be to the vessel-sharing agreement. CMA CGM has added peak season surcharges on trans-Atlantic trips to the U.S. as the tariff situation remains at an impasse. From June 1, all cargo headed for the U.S. from northern Europe will carry an extra fee of $400 per TEU or $800 per FEU. And from June 15, cargo from Mediterranean ports to the East and Gulf Coast will get a $500 surcharge. Maersk is slapping peak charges on China- and east Asia-originated cargo to U.S. and Canada as well, hitting them with an extra $1,000 per TEU and $2,000 per FEU. 'Given the tighter capacity on the trans-Pacific, ocean carriers are in the driver's seat to push freight rates meaningfully higher,' said Jefferies analysts in a research note Tuesday.
