as demand normalised and congestion eased at US ports, significant capacity was introduced on the back of a rebound in Japanese exports to the US, and airlines were no longer skipping or canceling calls at Japanese ports to maintain trans-Pacific service levels. Shipping executives say competition among shipping lines in the Japan-U.S. trans-Pacific trade is becoming fiercer.
Xeneta, the seaborne freight benchmark platform, said container freight rates from Japan to the West Coast of the United States last August were about $14000 per FEU. At the same time, shipping companies are pushing for a significant rate increase and a peak season surcharge on rates that have fallen by 88% in the past eight months.
The current West Coast rate for from Yokohama to Los Angeles is $1,800 to $3,000 per FEU, and the rate for Los Angeles to Yokohama is $1,500 to $2,000 per FEU. S. East Coast, rates from Yokohama to Charleston range from $FEU2500 to $4000 and from Charleston to Yokohama from $FEU1700 to $2200.
Some airlines also plan to raise rates in May. Hapg-Lloyd will have a GRI of $800 per TEU/$1000 per FEU from Asia to the United States from May 1, while COSCO Shipping will implement a similar level of GRI from Asia, South Asia and the Middle East to the United States from May 15.
Xeneta's data shows that in August last year, the cost of a 40-foot container from China to the United States was about $8500, 40% cheaper than from Japan to the United States and 24% cheaper than from South Korea. These rate spreads are attractive for Japanese shippers to transit through China to the United States, and have largely disappeared as services normalize. But with the normalization of services, this spread has largely disappeared.
Xeneta Chief Marketing Officer Catherine Barrios said this reflects a trend where carriers are less worried about delays and congestion and therefore prefer to call at several ports, and also reflects that as shippers' negotiating power returns, market conditions return to normal.
Capacity continues to surge
Rhenus Sankyo Japan managing director Keiko Kiso said the capacity surge will intensify as new services roll out and carriers deploy larger vessels ordered during the container shipping boom, sparking a tough freight war in the market.
These new loops include Dafei CGM's Chesapeake Bay Express (CBX) service, which is the only direct route between Japan and the U.S. East Coast, which opened from Yokohama on March 21. The service includes Asia's Singapore, Haiphong, Shanghai and Busan, and the East Coast's Savannah, Charleston and Norfolk.
S. East Coast export services recovery will help strengthen Yokohama Port's Asian hub function and ensure Japanese shippers' seamless logistics.
Kiso said that because most airlines have stopped small land bridge truck and rail services at West Coast ports, there has been a shift in traffic from the West Coast to the U.S. East Coast, which has caused small shipping companies including CU Lines and Jinjiang Shipping to stop trans-Pacific services.
Transportation consulting firm MDS Transmodal's senior consultant Antonella Teodoro noted that in the first quarter of 2023, the industry's capacity was slightly above 1.2 million TEU, deployed by 8 operators in 14 services, and capacity between Japan and the United States was almost back to the level of nearly two years ago. This is the highest level since the second quarter of 2021, when 12 operators deployed nearly 1.3 million TEUs of capacity across 16 services. "
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