Container rates continue to drop

Drewry’s World Container Index (WCI) continued its decline for the week of July 7-11, falling another five per cent to US$2,672 per 40-ft container.

Drewry indicated that the drop is a direct result of the low demand for U.S.-bound cargo and is a sign that the recent surge in U.S. imports, which occurred after the temporary halt on higher U.S. tariffs, will not have the lasting impact it had initially expected.

Freight rates from Shanghai to Los Angeles decreased eight per cent to US$2,931 per 40-ft container in the past week, but spot rates were also up eight per cent compared to nine weeks ago. Similarly, spot rates from Shanghai to New York dropped five per cent this past week to US$4,839 per 40-ft container, but gained 33 per cent since May 8. Drewry expects spot rates to continue to decline next week as well due to excess capacity and weak demand.

Freight rates from Shanghai to Genoa decreased seven per cent to US$3,491 per 40-ft container, while those from Shanghai to Rotterdam fell two per cent to US$3,384.

However, Drewry’s container forecaster expects the supply-demand balance to weaken again in the second half of the year, which will cause spot rates to continue to decline. The volatility and timing of rate changes will depend on U.S. President Donald Trump’s future tariffs and on capacity changes related to the introduction of the U.S. penalties on Chinese ships, which are uncertain.