[081220.EN.BIZ] Agriculture Exporters Hit Hard by USWC Box Market Gyrations

 

RECORD volumes and soaring rates between on the transpacific have caused a spike in the number of containers leaving the Port of Los Angeles empty in a rush back to the Far East, reports BIMCO, the shipowner lobby, reports Hellenic Shipping News Worldwide.

"The unprecedented number of containers arriving in the US, and carriers' decision to forego backhaul volumes in favour of speed, is creating headaches for American exporters, particularly in agriculture," said BIMCO's chief analyst Peter Sand.

"This is for instance the case for US grain exporters who rely on the cheap rates to transport their cargo to the Far East," he said.

"The strength in US container imports can be attributed to robust consumer demand for durable goods, the restocking of inventories following the disruption earlier in the year due to the pandemic," said Mr Sand.

Freight rates are five times higher going from east to west than the other way around. In October alone, 325,980 empty containers left the Port of Los Angeles, a 43.3 per cent jump from October 2019.

Record high loaded imports of 506,613 TEU in October, a 29.0 per cent increase from last year, compared to only 2.6 per cent growth in the number of loaded exported containers (143,936), mean that for every loaded container going out, 3.5 come in.

While the transpacific is far from a balanced trade, past few months have made this imbalance worse, as soaring rates and strong demand have induced carriers to return containers to Asia as quickly as possible.

For some, this has meant refusing backhaul cargo, in favour of turning an empty container around as fast as possible; a rational decision when comparing a US$754 per FEU spot freight rate from the US west coast to the Far East with the $3,913 per FEU carriers can expect for a container going the other way.

Source : HKSG / Photo : JoC.