LOS ANGELES (Reuters) -Container shipping rates continued their climb this week, fueled by the temporary tariff pause between the U.S. and China, but there are signs that demand underpinning the surge
Container Shipping Rates Driven by Tariffs Show Signs of Stabilizing
LOS ANGELES (Reuters) -Container shipping rates continued their climb this week, fueled by the temporary tariff pause between the U.S. and China, but there are signs that demand underpinning the surge is moderating, financial analysts and maritime consultants said.
Ocean vessels transport more than 80% of goods traded globally. Hulking container vessels operated by companies like MSC and Maersk ferry toys and apparel to Walmart stores and parts to factories run by major manufacturers such as Ford Motor Co. Off-contract spot rates for moving container cargo are seen as a gauge of economic conditions.
Maritime consultancy Drewry on Thursday said its World Container Index jumped 41% week-over-week to $3,527 per 40-foot container (FEU). The index was up 70% in the last four weeks, spurred by the May 12 U.S.-China trade truce that cut China tariffs to 30% from the 145% rate that collapsed trade between the world's two largest economies.
Freight rates from Shanghai to Los Angeles, home to the busiest U.S. seaport, surged 57% to $5,876 per FEU in the past week and 117% since May 8, Drewry said. That rate is down 2% from a year ago and well below the $10,000-plus rates seen during the height of the COVID supply chain crunch.
The closely watched Shanghai Containerized Freight Index, which tracks spot rates from the world's busiest container port in Shanghai, is on track to report another gain this week, Jefferies shipping analyst Omar Nokta said in a client note.
The underlying SCFI route to the U.S. West coast was $5,172 per FEU last week and the latest spot rates are closer to $6,000, Nokta said.
Still, those rates may be peaking as quotes for the second half of June are closer to the $5,000 to $5,500 per FEU range, he said.
Drewry's Container Forecaster expects demand to weaken again in the second half of this year, which would cause rates to fall again.
The volatility and timing of rate changes will depend on the outcome of legal challenges to Trump's tariffs and on capacity changes related to the introduction of port fees on Chinese ships, Drewry said.
(Reporting by Lisa Baertlein in Los AngelesEditing by Nick Zieminski)
