Container rates drop due to low U.S. demand

For the first time in more than a month, Drewry’s World Container Index (WCI) fell by seven per cent to US$3,279 per 40-ft container for the week of June 16-20.

Following six weeks of gains, Drewry said the decline was mainly due to the low demand for U.S.-bound cargo. It is a sign that the recent surge in imports to the U.S., which occurred after the temporary halt of higher U.S. tariffs, will fail to have the lasting impact we had initially expected.

Freight rates from Shanghai to New York decreased 10 per cent to US$6,584 per 40-ft container in the past week. However, spot rates are still up a significant 81 per cent compared to six weeks ago, while those to Los Angeles dropped 20 per cent this past week, but gained 73 per cent since May 8.

Freight rates increased from Shanghai to Rotterdam by 12 per cent to US$3,171 and Shanghai to Genoa one per cent to US$4,075 per 40-ft container.

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 decline. The volatility and timing of rate changes will depend on the outcome of legal challenges to U.S. President Donald Trump’s tariffs and on capacity changes related to the introduction of the U.S. penalties on Chinese ships, which are uncertain.