New Delhi — Container prices on the trans-Pacific route -- which have risen to record highs recently -- typically fall back in October when demand traditionally slows, but this year might be an exception as the shortage of containers in Asia is far from over and likely to persist in coming months, sources said.
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Hapag Lloyd, one of the largest container carriers, has already announced rate rises for the trans-Pacific route of $960 and $1,200 for 20-foot and 40-foot containers, respectively, effective Oct. 15.
"As for trans-Pacific, there is a very strong demand that simply outstrips supply even though we have deployed all services and several extra loaders are in the market," the company told S&P Global Platts.
"This means customers are pushing carriers for extra space and offer to pay premium rates to get extra space, which is fueling the current rate increase. The strong demand is further fueled by very extraordinary robust retail sales in the US with all big retailers seeing double digit growth in sales."
Meanwhile, Orient Overseas Container Liner has restored six October sailings that were previously canceled, citing "expected demand change in the market".
It won't be too surprising to see others follow suit, sources said.
Even if there was a slowdown in demand after the Golden Week, the carriers will rapidly withdraw capacity to keep prices elevated, if not at record levels, Lars Jensen, CEO and Partner at Sea Intelligence Consulting, said.
"They (carriers) have learned the game...I do not think they are going to go back from that approach," Jensen said.
Platts Container Rate 5 –- covering North Asia to East Coast North America -– was at $4,200/FEU on Sept. 11, an all-time high for that trade lane and up 53% from June 1.
In the coming days, rates are likely to be supported by persistent container shortage in Asian market due to a skewed import-export ratio and supply-chain disruptions.
Availability of 40-foot containers might be a problem in coming months as demand on the trans-Pacific route has been high and exports outnumber imports, Shankar Varatharajan, General Manager, Global China Logistics (Shenzhen) Co. Ltd, told Platts.
Meanwhile, government intervention to curb price rises was a key factor to watch out for. According to media reports, China summoned carriers on Sept. 11 to discuss measures to regulate the sharp rise in trans-Pacific rates. The government advised carriers to cancel blank sailings and to pass on the benefit of low oil prices to consumers, according to reports.