Week commencing February 19 saw the supply chain start pressurizing carriers for more realistic box rates as Lunar New Year drew to a close.
The expectation for main head haul box rates to drop has been apparent since early February, with carriers taking proactive measures to maintain box rates at least at pre-New Year levels.
The carriers issued void sailings for the next few weeks and notified their customers that the validity period of box rates had been extended to mid- to end-March.
The anticipated drop has occurred from February 21, albeit with a varied impact. The first head haul route to lower its box rate was North Asia to Mediterranean, down $100 to $1,200/FEU on February 21.
The North Asia to North Continent and UK routes both fell $100 to $1,500/FEU on February 22.
The concern though, from a box rate perspective, is that freight forwarders are already securing loadings well below this assessed level, with some rates as low as $1,300/FEU.
A logistics source said box rates “could fall back to December levels before the end of February.” S&P Global Platts assessed box rate level for December at $1,300/FEU for these routes.
The North Asia to West Coast North America route has seen a more drastic drop of $200, February 23, to $1,300/FEU.
On the East Coast inbound route from North Asia, PBR5, the box rate dropped to $2,600/FEU from $2,800/FEU Friday.
As mentioned earlier, the container industry had expected box rate decreases but with US annual contract negotiations starting to take place it had hoped for a calmer rate decline than the recent $200 incremental declines.
However, the container market is in a better position than it was this time last year and the US annual contracts should be secured at a higher level over the coming months, similar to the European ones.