Shippers should consider U.S. West Coast import gateways for significant cost savings, even with added inland logistics.
“If a shipper has the flexibility of importing goods into U.S. West Coast instead of East Coast, then they must seriously consider it because there is dramatic savings potential, even if it means a heavier reliance on truck and rail to reach the final destination,” said Xeneta Chief Analyst Peter Sand. “This underlines the dynamic approach supply chain professionals must take in managing resilience and freight spend during major market shocks.”
While spot rates on the trans-Pacific continue to tick up, the spread between these two U.S. fronthaul trades is also growing.
“Importing into the U.S. East Coast is currently $3,334 per forty foot equivalent unit (FEU) more expensive than the U.S. West Coast,” Sand said. “Incredibly, this current spread between the trades is greater than the total cost of shipping one container into either coast before the start of the Middle East crisis on February 28 when spot rates stood at $1,879 per FEU into U.S. West Coast and $2,651 into U.S. East Coast.”
Xeneta’s market average spot rates from Asia for the week of August 21 were up 2.7% to $7,193 per FEU to the West Coast, and 2.8% to $10,527 to the East Coast.
Carriers are flexing their negotiating strength amid unexpectedly strong demand and increased blank sailings, sending spot rates to the East Coast up almost 300% compared to pre-Middle East crisis. Severe congestion from typhoons and growing demand among key Asia ports is also causing havoc in rotations.
“But the European trades show there is a ceiling, with spot rates into North Europe and Mediterranean softening for over a month,” said Sand. “Uncertainty is toxic for supply chains and the uncertainty feels more severe in the U.S., which could explain why rates are still heading upwards. But U.S. shippers should certainly look towards Europe when negotiating because it shows carriers are not invincible and it is possible to negotiate lower rates.”
Since the end of February, Asia-West Coast prices are up 39%, or $2,812 per FEU. Asia-East Coast rates have surged 42%, or $4,399 per FEU.
Read more articles by Stuart Chirls here.
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