Port Report: Container Ship Rates Struggling With Summer Lull

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Container shipping faces weak summer demand as trade related uncertainties keep pressure on freight rates.

The Freightos Baltic Global Container Index (SONAR: FBX.GLBL) ended June 21 at $1,307 per forty-foot equivalent unit (FEU), down from $1,362 per FEU at the start of June.

One of the biggest trades for container shipping, Asia-to-North America West Coast (SONAR: FBX:CNAW), illustrates the difficult market for container shipping. The rate there sits at $1,436 per FEU, down from the $1,470 per FEU level seen seen earlier in June.

The container ship lines are hoping to see a better July. General rate increases of $1,000 per FEU are being proposed from next month, according to international freight forwarder A.N. Deringer.

Liner companies are dropping some calls during July due to poor demand.

Ocean Alliance, the largest carrier in the trans-Pacific market, plans to drop a July 13 sailing eastbound from Fuqing, China and returning westbound from Los Angeles August 4, according to U.K.-based container news service PR News Service. That service has weekly vessel capacity of just under 14,000 twenty-foot equivalent (TEU).

Another Ocean Alliance service will see two void sailings eastbound from Yantian, China July 1 and July 15. That service has weekly capacity of 10,800 TEU.

The rate increases are coming ahead of what is typically seen as the start of the peak ocean freight season at the end of July. Moreover the draft restrictions that went into effect this month for the Panama Canal are also helping to keep rates firm as shippers opt for a U.S. West Coast transit rather than U.S. East Coast transit.  

But S&P Global’s Container Freight Market report says the peak season may not be as strong as expected. Their weekly report says container rates are likely to be at current levels until at least mid-July.

The Ningbo Shipping Exchange is seeing a similar dynamic play out. It says demand remains stable on the main trade from Asia-to-North America trade lane as “most liner companies adopted a wait-and-see attitude” on rates. “But a small number of liner companies with poor loading rates reduced freight rates slightly for market share,” the Ningbo Shipping Exchange said.

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