September marked the highest levels of international freight rates in history! You read that right, the highest ever! International shipping rate levels from China and greater Southeast Asia to the United States have been ever-increasing since late April this year. Importers have witnessed a constant and continuous march upwards, month by month.
Good news is here, lower rates are finally on the horizon! In recent weeks, China’s Ministry of Commerce as well as the US Federal Maritime Commission have spoken out against steamship lines and the continued increases. The FMC has announced an Anti-Trust investigation into price fixing against carriers. Meanwhile, China’s Ministry of Transportation (MOT) has held face to face meetings with key steamship lines.
The results of these actions appear to be reducing freight rates in the very near future. The MOT met with Cosco, OOCL and other carriers in Shanghai recently. The determination given to steamship lines is that September 15th rate levels are to be the highest of the year and rates shall not exceed those levels again. In response, many lines have already canceled October 1 GRI, extending current rates to October 14th. Some lines have also gone ahead to indicate rate extensions through end of October. Blank sailings are also to be controlled. Lines have been instructed not to introduce any additional blank sailings to the market in their effort to manipulate capacity, whereby continuing to create rate pressure driving pricing up.
There are some concerns from experts within the field. While lines have managed to generate the second best Q2 since 2010, with more than $2.7 billion in profit, preventing their ability to manage capacity in market downturns could spell trouble long term. Only time will tell how China’s MOT will monitor and manipulate vessel capacity limitations, blank sailing guidance and spot rate ceiling guidance.
Space is still quite full and likely to remain this way for several more weeks. At least at this time, importers can take pleasure in the fact that we have peaked in terms of pricing to move products and goods into the US from abroad.