New Capacity Pushes India-US Ocean Spot Rates Down for May
ONE’s (Ocean Network Express) new West India-North America Express service, also referred to as WIN, has its debut call to port at Nhava Sheva on May 12. The weekly nine-vessel loop includes three Indian ports of call before continuing to the US East Coast, but the injection of additional ocean capacity on the India-US lane is forcing spot rates down.
Week-over-week ending in the second week of May, local freight forwarder spot rates from Nhava Sheva/Mundra to New York fell by $600 to $1,000/TEU, according to the Journal of Commerce. Port-to-port pricing by carrier for the first week of May is Hapag-Lloyd — $3,013 per TEU and $3,513 per FEU; CMA CGM — $3,202 per TEU and $3,557 per FEU; and Maersk — $2,109 per TEU and $2,649 per FEU.
According to Platts, the average India-US East Coast spot rate as of May 2 was $3,612/FEU, down 4% from the last week of April.
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Household Goods Imports Still Low After Housing Market Crash
Imports of household goods (HHG), which include appliances, furniture, and cookware, are waiting for a housing market revival to reverse two consecutive years of declining import numbers.
From 2021 to 2022, HHG imports fell by 5.7% after riding the demand boom through the first years of the pandemic. In the following year from 2022 to 2023, HHG containerized imports plummeted another 15.9% to 4.4 million TEU due to continued inflation, low housing turnover, and a shift in consumer spending towards entertainment and services and away from durable goods.
Although this year’s first quarter saw year-over-year gains of 27.9% for HHG imports, hinting at a resurgence, it was still 18.1% lower than Q1 2022.
HHG manufacturers and retailers hoped for an uptick in new home construction and sales by the end of this year, however, current forecasts show that this is unlikely. According to US Census Bureau data, while single-family housing starts rose 35.2% from January to February, they then fell 12.4% in March, returning mortgage rates to levels seen last fall. Sales of existing homes also fell 4.3% from February to March.
The Leading Indicator of Remodeling Activity (LIRA) from the Joint Center for Housing Studies at Harvard University shows homeowner spending for renovations and maintenance will see a 7.4% year-over-year drop in this year’s third quarter, easing to a 2.6% year-over-year decline in the first quarter of 2025 before import volumes begin to increase again.
US Trucking Declines Further with Depressed Rates and Volumes
The latest data from the US Bank Freight Payment Index has essentially dashed hopes of a quick recovery for US trucking. The freight payment index highlights the depths to which trucking rates and volumes have fallen, with 2024’s first quarter having the largest year-over-year decline in truck shipment volumes which fell by 21.6%. The fourth quarter of 2023 also saw a less drastic fall of 7.8% from the same period in 2022.
According to US Bank, this was the eighth-straight quarter with year-over-year volume losses and the fifth to see drops in consumer spending. Although volumes in Q1 of this year fell 21.6%, spending by shippers fell by 27.9% in the same period, signaling a disproportionate amount of downward pressure on freight rates.
The Journal of Commerce’s all-inclusive shipper-paid spot truckload rate highlights this further, falling 2 cents from February to March at $2.20/mile. The weighted average spot price for one year ago was $2.36/mile.
Many trucking carriers are hoping for a reduction in capacity to drive rates back up, however, the combination of fewer truck orders and the loss of many smaller carriers have done nothing to pull capacity back to pre-pandemic levels.
Spikes in Trans-Pacific Spot Rates Put Pressure on Importer Service Contract Talks
Trans-Pacific spot rates are poised for a spike in the first half of May, pushing mid-sized US importers to sign their contracts with carriers quickly or face paying more than double on the spot market compared with the current contract rates under negotiation.
Spot rates increased by as much as 30% on May 1 thanks to the latest general rate increases (GRIs) that added as much as $1,000/FEU to services. After the GRIs, average trans-Pacific FEU spot rates to the US West Coast are $4,200, $5,400 to the East Coast, and $5,600 to the Gulf Coast.
While some mid-sized importers have been holding off finalizing their contracts in the hope that prices would fall, many of the signed contracts for the 2024-25 period range from $1,600 to $1,700/FEU to the West Coast. Contract prices to the East Coast began at $2,860/FEU, but subsequent rounds of negotiations between many importers and carriers dropped that rate to $2,700.
Baltimore Prepares for a Return of Container Traffic from Asia End of May
The Port of Baltimore is planning on a return of cargo from Asia to terminals affected by the collapse of the Francis Scott Key Bridge by the end of May. Container lines have alerted the port that they have started taking bookings for services calling into Baltimore, with Maersk’s new TP20 service being one of the first to arrive.
Before the collapse of the bridge, Baltimore was one of just a few East Coast ports to register growth in laden container volumes in 2023, increasing 4.2% year-over-year. There is also momentum in distribution center growth, as Floor and Decor doubles the capacity of its Tradepoint Atlantic Terminal distribution center to 2.8 million square feet.
(Source: Anmol Kerketta | Unsplash)
