Transportation & Logistics Analysis

Shanghai - Los Angeles: maritime freight rates are on the rise

March 18 2020

There has been a rebound in freight rates between Asia and the West Coast of the United States. A trend that has been favored by the (partial) recovery of activity in China, at a time where US companies need to replenish their stocks.

With the return of industrial production to an average level of 75% of its normal capacity and the ongoing easing of congestion in Chinese ports, an influx of orders from the United States has caused eastbound transpacific freight rates to overheat (up 18% on one month according to the latest SCFI report on March 13th).

As capacity leaving Asia is still limited at this stage, the current average waiting time to load goods on board a ship varies between 10 and 15 days. The president of the US Federal Maritime Commission (FMC) has expressed his concerns about this situation in the columns of the Loadstar. He urged shipping companies not to "take advantage" of the situation, as they have been tempted to restore margins that have been seriously damaged since the beginning of the year.

As the United States begins to replenish stocks for retailers and a serious lack of some parts from China that are vital to the US automobile production assembly lines has been observed, one can also ask the question about the country's capacity to organize the domestic transport from the ports, in the context of the Covid-19 which has just arrived on American soil. There are actually 2 curves that follow each other with a 45 day lag. While the East seems to be gradually overcoming the obstacles of the Coronavirus, the West is now entering a period of crisis which should be of a similar duration. Exceptional measures to guarantee smooth transit through ports in the United States and in Europe will be essential to minimize the impact of the crisis as much as possible.

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Expert in Ocean shipping for 25 years, Jerome puts all his knowledge of the industry to contribution for Upply. Ship captain at heart, he has written the English-French Lexicon of Containerized Shipping (Paris: CELSE, 2001).
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