Decline in Ocean Freight From China to US

From Bloomberg

The average price for long-term contracts — on shipments moving in about three months or more — was 2.7% higher on average than the cost for short-term movement on transpacific routes as of Tuesday, according to freight market-analytics firm Xeneta.

It now costs about $7,980 to transport a 40-foot container from China to the US’s largest gateways for trade on the West Coast on a long-term contract, more than double the $3,070 paid a year ago. Meanwhile, prices are at almost $7,770 — a 47% increase from last year — for near-term movements.

Source: Xeneta

Cargo owners using the transpacific trade lane are worried about the expiration of a labor contract for about 22,000 American dockworkers on July 1. The International Longshore and Warehouse Union and the Pacific Maritime Association, which represents more than 70 employers, are negotiating a new contract for thousands of dockworkers across 29 West Coast ports.

Both parties said last week they’re unlikely to reach a deal before then, but reaffirmed they’re committed to avoid disruptions that would further hobble supply chains. (Read more about what’s at stake here.)

“While we await the signing of a new contract between ILWU and PMA, other aspects are also important when forecasting where rates are heading,” Peter Sand, Xeneta’s chief analyst, wrote in an online post. He added that consumer spending and inflationary pressures, as well as the level of disruptions across the US’s logistics network, will also impact prices.