Pacific box rates plunge

 Eastbound rates have plunged below US$500 per teu, latest figures from Drewry Shipping Consultants show.
Rates have been falling steadily since late last year, with a further downward lurch this month, pushing them through the US$1,000 per 40 ft barrier to US$949.
That represented a decline of 3.7% over the seven-day period and a 53% drop since May 2008, when trade conditions were relatively stable.
Drewry’s figures are based on an average charge by non-vessel-operating common carriers from Hong Kong to Los Angeles for spot cargoes, excluding terminal- handling charges at the origin port.
A year ago, rates exceeded US$2,000 per 40 ft box, having rallied over the previous year.
The latest figures throw some light on the annual contracting season, which is drawing to a close. Most cargo is shipped from Asia to the US under 12-month contracts that are renewed at the start of May.
Despite intensive efforts to hold rates stable, it is now clear that lines were forced to accept considerable discounts in contracts, with Maersk Line chief executive Eivind Kolding disclosing that percentage rate cuts ran to double digits.
Contract terms bind lines into those rates for the coming year, with relatively little scope to renegotiate prices should market conditions recover.