Spot rates from China up 91% over last year

Dive Brief:

Spot rates for shipping a container from China / East Asia to North America rose by 91% in November 2018 compared to last year, according to an analysis of Freightos Baltic Index data.
It cost an average of $2,552 per TEU to ship to North America's West Coast, and $3,650 per TEU to ship to the East Coast over the past four weeks. In November 2017, spot rates averaged $1,332 and $1,907 per TEU, respectively.
This month's spot rates remain at least 34% higher, when compared to 2016. In November 2016, it cost $1,892 per TEU to ship to the West Coast, and $2,654 per TEU to ship to the East Coast.

Dive Insight:

Spot rates are by nature volatile, but recent months have seen costs go up, up and away from previous norms.

The cost of shipping a container from China has risen dramatically in the past two years, with spot rates now nearing a $4,000 per TEU baseline. The most visible shift, though, has come in the past few months.

Edwin Lopez / Supply Chain Dive, data from Freightos Baltic Index

From September 2017 to May 2018, shippers were on average paying lower spot rates to ship a container from China than they did in the previous year. That trend reversed in June 2018 and is only accelerating.

In June 2018, spot rates to the East Coast were only 13% higher from 2016 — a rise that could be passed off for inflation or increased demand. By September 2018, the two-year comparison showed a 51% gap. In November, the 2-year gap shrunk to 38%, but also marked a far wider gap (91%) from 2017's figures.

The story is no different on North America's West Coast.

Peak season is proving far more expensive in 2018 — Edwin Lopez / Supply Chain Dive, data from Freightos Baltic Index

Although the trend did not reverse until July, by November 2018 shippers faced rates that were 91% higher than 2017's figures and 34% higher than 2016.

The similar experience among both coasts suggests the shifts are not limited to supply-and-demand mechanics, but rather shipping rates are being affected by external economic factors.

Analysts predicted this peak season would be more expensive than previous years due to limited capacity, high crude oil costs and a general shift in transportation cycles. Combined with continually rising demand for imports, as seen by rising loaded container volumes at ports, spot rates were bound to rise.

But such trends could be seen, at least in some form, in the transportation cycles of 2016 and 2017, too.

One big difference this year is that tariffs entered force between the U.S. and China in June, August and September. Reports suggest the trade war has caused shippers to accelerate their shipments before tariffs rise.