Chinese New Year shutdown drives box spot rate up 20pc

CONTAINER shipping companies plying transpacific routes are raising rates for eastbound capacity out of China with the spot rate from Hong Kong to Los Angeles soaring 20.5 per cent to more than US$2,000 per FEU in the last week, according to London`s Drewry Shipping Consultants.
Record highs in recent weeks were driven by an "emergency rate charge" levied on January 15 by the 15 carriers of the Transpacific Stabilisation Agreement (TSA). But the carriers have also managed to nearly double the spot rate compared to the TSA guideline.
The TSA called for a mid-contract emergency rate increase of $400 per FEU for January 15 from Asia to west coast ports to compensate carriers while they waited for the money from supposed increases in forthcoming contracts with shippers in 2010 and 2011 round. But spot rates in the most recent week jumped by $728 above the $1,284 per FEU rate prevailing in the first week of January as shippers bid on scarce vessel space.
The rise is attributed to a shortage of vessel space ahead of the one-week factory shutdowns on the mainland because of Chinese New Year from February 14, as well as having 10 per cent of the global container fleet laid up as a result of the economic downturn.
Such effects have been confirmed by shippers and carriers alike. Importers say their cargo has been rolled over because of a space shortage. One carrier told a shipper, reported Newark`s Journal of Commerce that so many containers had piled up in Shanghai that they could have filled another ship bound for the west coast.