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Trans-Pacific Spot Rate Hits New Low [Container Shipping]
The Journal of Commerce Online ^ | May 20, 2009 | Peter T. Leach

Posted on 05/20/2009 10:16:08 PM PDT by Vince Ferrer

Rate tumbles 3.7 percent in a week, 53.4 percent in a year

Average spot rates collected by ocean carriers for a 40-foot container from Hong Kong to Los Angeles fell to a new low of $949 this week, down by 53.4 percent from $2,036 a year ago, according to data compiled by Drewry Shipping Consultants in London for the weekly Container Rate Benchmark published by The Journal of Commerce.

The rate for the week starting May 18 is thought to be the lowest rate ever. It was down 3.7 percent from $986 last week, when it fell below the $1,000 level for the first time since Drewry began compiling the rate in 2005.

Drewry compiles the average weekly spot rate from data provided by non-vessel-operating common carriers in Hong Kong. It is the rate charged by carriers for containers that are not booked under their annual contracts with large shippers. The rate, which excludes the terminal handling charge at the port of origin, applies to containers booked for passage at the last moment.

When cargo volume is strong and space is tight as it was for six years until last year, shippers have to pay whatever the carriers can charge to get their cargo aboard a ship, but when volume is weak, as it has been for the last nine months, some shippers bet that the rates will fall and wait until the last moment to take advantage of the spot rate.

Shippers aren’t guaranteed space, but in the current environment, they are almost guaranteed low rates. The weekly spot rate has gone down or stayed flat in every week since the first two weeks in August of last year, when it rose for two weeks in a row before flattening out again.


TOPICS: Business/Economy
KEYWORDS: container; gloomdoom; shipping
It is the rate charged by carriers for containers that are not booked under their annual contracts with large shippers.

And in renegotiating their annual service contracts, shippers have gotten a double digit rate cut out of the carriers there too.

Pacific box lines concede double-digit rate cuts [Container shipping]

1 posted on 05/20/2009 10:16:09 PM PDT by Vince Ferrer
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To: Vince Ferrer

Is there an industry standard for break even?


2 posted on 05/20/2009 10:57:34 PM PDT by 1010RD (First Do No Harm)
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To: 1010RD

No, the breakeven rate would be different for each carrier. They used to collude to fix prices, but that is illegal now.


3 posted on 05/20/2009 11:19:00 PM PDT by Vince Ferrer
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To: Vince Ferrer

As of MONDAY, 16 of the worlds 21 “SuperCapeMax” Container ships (Aircraft Carrier sized monsters of 150,00+ tons!) are sitting UNLEASED off of Singapore, along with 732 other container ships.

Ships that were getting $300,000 a day last spring are getting just $18-30,000 per day now.

While the Obama-Worshipping US Media tries to talk up the economy the Dems spent four years talking DOWN, EVERY forward looking Economic indicator, from shipping to steel production, is dropping like a stone.

Hang on, folks...
It’s going to get worse, before it gets a LOT worse.


4 posted on 05/20/2009 11:19:07 PM PDT by tcrlaf ("Hope" is the most Evil of all Evils"-Neitzsche)
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To: tcrlaf

Yup...info like this doesn’t get out onto the LSM alphabet networks. Now, just about all US media is in on ‘the in’ to lie to the public w/ regards to economic recovery. The $500-$700 trillion global CDS Ponzi scheme is still unwinding.


5 posted on 05/21/2009 2:21:34 AM PDT by RSmithOpt (Liberalism: Highway to Hell)
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To: tcrlaf

Scrapyards are going to be very very busy cutting up older and more inefficient ships.


6 posted on 05/21/2009 3:29:38 AM PDT by Jimmy Valentine (DemocRATS - when they speak, they lie; when they are silent, they are stealing the American Dream)
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To: tcrlaf

Hang on, folks...
It’s going to get worse, before it gets a LOT worse.
////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////

And after that things are really going to hell! Yahoo is reporting stock futures down and a global equity selloff. The sucker’s rally has to end soon and that is when we really start to see how bad it is. This whole rally has been based on smoke and mirrors, a huge pump and dump operation designed to suck the last nickel out of the unwary.


7 posted on 05/21/2009 5:44:51 AM PDT by RipSawyer (Change has come to America and all hope is gone.)
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To: Vince Ferrer

Thanks for the reply.

Have they always experienced growth per #7? How much in loses could the largest shippers endure?


8 posted on 05/21/2009 5:56:18 AM PDT by 1010RD (First Do No Harm)
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