An anomaly in container shipping data has emerged, with US West Coast imports from Asia experiencing a decline in rates due to concerns over a potential US recession. Concurrently, apprehensions regarding dockers' strikes on the East Coast and the election have heightened fears of further disruptions. Peter Sand, Xeneta's chief analyst, has identified Mexico as a viable alternative for US imports, noting that Mexican ports have successfully managed a 30% year-on-year increase in volumes from China.
According to Sand, the rise in contract rates in July reflects a strategy among shippers and forwarders to mitigate risks in an unpredictable market by allocating 10-25% of their volumes to Mexico. This approach aims to safeguard against the impacts of heightened tariffs or industrial actions on the East Coast. The anticipation of higher tariffs, depending on the election outcome, has prompted an early peak season as shippers expedite cargo shipments to evade potential tariff increases.
Linerlytica reported a continuous decline in the SCFI, marking the fourth consecutive week of decrease, fueled by fears of a US recession. Contract rates from Asia to Mexico saw a significant drop from US$2,630/FEU in mid-late September 2023 to just over US$2,000/FEU by 31 December, a reflection of the season's end. Rates to Mexico remained stable in Q1 of 2024, later decreasing by 5% to US$1,893/FEU by 1 April, with minor fluctuations persisting until a substantial increase to over US$2,550/feu on 1 July, followed by a decrease in August.
Emily Stausbøll, Xeneta's senior shipping analyst, highlighted the importance of the narrowing gap between long-term and short-term markets, suggesting that a continued fall in spot rates could alleviate upward pressure on long-term rates. In Europe, carriers have maintained firm headhaul rates by reallocating capacity, thus absorbing much of the anticipated over-capacity. The ongoing Middle East conflict has led to varied contracting strategies among shippers, with some securing long-term rates and others negotiating short-term contracts or accepting Red Sea surcharges with provisions for adjustments based on changes in the Middle East situation.
Source: container-news.com