Trans-Pacific spot freight rates are still rising at an accelerating rate, Maersk: Asian shipping demand will maintain a strong momentum in the third quarter

There are now less than two weeks before the second half of the year. In view of the current freight rate trends and the upcoming peak season demand, the early forecasts of spot freight rates seem to be becoming increasingly unreliable unless it happens. An unforeseen event of a sharp decline in U.S. demand.
With the newly announced general rate (GRI) increase by shipping companies, and the impact of congestion at Chinese ports, it is an important factor affecting the continued increase in freight rates.
Asia-U.S. East Coast hits a new high

After the implementation of the new GRI by shipping companies, the daily assessment index of the Freightos Baltic Index (Freightos Baltic Index) for Asia and the East Coast of the United States rose 7% from Monday to $9,889/FEU, a record high. Its assessment on Wednesday remained unchanged, with a year-on-year increase of 224%.
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The trend of index changes provides guidance for the trend of the balance of supply and demand, but under current market conditions, they reflect much less actual costs, and these assessments do not include the additional costs normally required to load cargo, which are estimated to be between 1,500 and 5,000 USD/FEU.
In some cases it seems even higher. It is reported that a carrier has just quoted a combined Asia-East Coast fee of US$19,990/FEU (which seems to include a US$10 "discount" to avoid the US$20,000 threshold).
Asia-West Coast hit a new high

On Tuesday, the Baltic Freight Index’s daily assessment of Asia-West Coast of the United States rose 9% from Monday to US$6,829/FEU, another record high. On Wednesday, it is estimated to fall back slightly to US$6,614/FEU, up 175% year-on-year.
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Drewry’s Shanghai-Los Angeles weekly freight index was US$6,358/FEU, a year-on-year increase of 197%. S&P Global Platts' daily North Asia-West Coast FAK assessment on Wednesday was US$5,800/FEU.
Retail demand remains exceptionally strong

In the end, the spot freight rate will not drop before the demand drops. It is generally assumed that as the number of people vaccinated increases, Americans will spend more money on services (restaurants, travel, etc.) and their spending on goods will decrease.
The New York Times and The Wall Street Journal both reported a seasonally adjusted decrease in May retail sales of 1.3% from April, partly due to the shift in consumer spending from goods to services.
However, a better indicator of container shipping is non-seasonally adjusted retail sales. According to a data set provided by Jason Miller, associate professor of supply chain management at Michigan State University's Eli Broad School of Business, expenditures related to container imports increased in May.
The May figure was 429.1 billion U.S. dollars, an increase of 3.6% over April and an increase of 17.5% over May 2019 (before the outbreak of the new crown pneumonia). This is the highest monthly total in 2021, second only to the monthly total in December 2020.

Will imports fall in autumn?

The National Retail Federation (NRF) expects a slowdown in container imports in the fall. Consulting firms Hackett Associates and NRF publish monthly global port tracking reports. The latest forecast shows that U.S. container imports in October will drop 10% from the peak in May.

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The drop in imports caused by congestion will not reduce the spot freight rate. However, if demand declines due to consumer spending shifting from goods to services, or if future demand declines due to an early pull, then in theory, freight rates will fall.
When asked why the October forecast was lower than that of May, Jonathan Gold, NRF’s vice president of supply chain and customs policy, replied: “The numbers we see now are very high because there are too many pent-up demands. More vaccines mean that people are finally out of the house to shop. Retailers have to import record quantities of goods to keep up.
"We expect consumer demand to remain strong, but due to continued supply chain disruptions and port congestion, many retailers are increasing holiday imports to ensure timely delivery of holiday goods," Gold said. "This means that the peak season that has traditionally occurred in October may arrive earlier this year, and most holiday goods will arrive before October."
In general, due to the lack of precedent, forecasting future imports is extremely challenging during the epidemic. For example: at this time last year, Global Port Tracker predicted that the total throughput for the five months from June to October 2020 was 8.28 million TEUs. In fact, the final figure was 9.95 million TEUs, an increase of 20% over the same period last year. .
Shipping demand in the Asia-Pacific region will maintain strong momentum in the third quarter
According to Maersk’s latest Asia-Pacific market information report, it is expected that Asian seaborne export demand will continue to maintain a strong momentum in the third quarter, and the overall shipping space of the route is tight.
The shortage of containers is still a challenge facing the entire industry in the Asia-Pacific region. The supply of 20-foot dry containers is sufficient, but the 40-foot and 45-foot dry containers are still in short supply. The picture below shows the current container supply situation in major Asian regions:
 

Overview of Maersk’s main routes and demand trends——

Australia and New Zealand's export space is still tight. Affected by port congestion, cancellation of berthings in New Zealand and port strikes in Australia, the schedule rate is still below 30%. In addition to the new Sirius Star and Triple Star routes, Maersk has also increased the capacity of the Southern Star route to increase the on-time rate. In addition, it has also improved the sea-air combined transport capacity of the Oceania domestic trade route.
At present, most ports in the world are congested and shipping schedules are delayed. The following is the latest development of the world's major ports:
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