Spot rates from the Far East to US West Coast collapsed by 46.3% over last 12 weeks - Xeneta

Carriers are fighting to shore up falling spot rates from the Far East to US West Coast, blanking some 1.5 million TEU of capacity over the last 12 weeks, according to Xeneta. However, despite this bold strategic play, rates have collapsed by 46.3% over the same period, currently averaging USD 4 150 per FEU (20 September). The latest data, released by Oslo-based Xeneta, highlights a shift in market fundamentals at what is usually a peak season for operators.
 
Peter Sand, Xeneta’s Chief Analyst, notes that carriers will no doubt be concerned about the wider implications of the increasingly global spot trend.
 
“This is the highest number of blanked sailings on this key trade since January and February, at a time when the industry would normally have anticipated very strong demand,” he says, adding: “It’s an aggressive strategic play by carriers, but it’s clearly not paying dividends.
 
“The last four weeks has seen capacity falling to its lowest levels since February, with an average of 275 000 TEU leaving the Far East for the US West Coast, about 50 000 TEU less than the peak in early August. Compared to the same period in 2021, capacity is down by some 13%. That’s the equivalent of removing 21 ships of 8 000 TEU, which is the average vessel size on this trade.
 
For now though, the trend is clear, leading to a stark supply and demand shift. According to Xeneta, for 2022 to date, capacity offered on the route is more than 600 000 TEU down year-on-year (-5.4%). The volume change is even more pronounced, with 700 000 TEU less making the journey from the Far East to the US West Coast in the first seven months of the year.
 
“To get things into perspective,” he comments, “compared to the same period in 2019, capacity on this trade is up by 240 000 TEU, whereas demand is up by 890 000 TEU. So, relatively speaking, the trend is worrying for carriers, but the figures remain strong. That said, what has happened to ‘peak season’? It just doesn’t seem to have materialized, does it?”
 
A positive knock-on effect of the declining capacity is the improvement in scheduled reliability for vessels on the trade. Data shows that 27.1% of ships are now sailing on schedule, an 11% improvement over this point last year. The average delay for late ships is also down, currently standing at 9.6 days.
 
In mid-September average rates from Asia Pacific to Europe and Middle East stood at USD 5.59 per kg, a 21% fall from their peak at the start of 2022. Spot rates are now lower than contracted rates - USD 5.52 per kg versus USD 5.58 per kg – something not seen in over two years. Meanwhile, despite a load factor that is down 7% since 2022 began (now at 85%), air freight rates have risen 2.8% year-on-year.
 
Although that figure isn’t significant in itself, it hides an overall jump of 166% against pre-COVID levels.
 
According to the data, some 43% of the Asia Pacific to Europe and Middle East trade is now sold on the spot market – up from 34% three years ago – while on the China to Europe corridor there’s a 56% bias (here spot rates are still higher than their contracted counterparts).
 
Oslo-based Xeneta’s software platform compiles the latest ocean and air freight rate data aggregated worldwide to deliver powerful market insights. Participating companies include ABB, Electrolux, Continental, Unilever, Nestle, L’Oréal, Thyssenkrupp, Volvo Group and John Deere, amongst others.
 
Xeneta is the leading ocean and air freight rate benchmarking and market analytics platform transforming the shipping and logistics industry. Xeneta’s powerful reporting and analytics platform provides liner-shipping stakeholders the data they need to understand current and historical market behavior – reporting live on market average and low/high movements for both short and long-term contracts. Xeneta’s data is comprised of over 300 million contracted container and air freight rates and covers over 160,000 global trade routes. Xeneta is a privately held company with headquarters in Oslo, Norway and regional offices in New York and Hamburg.