Container rates have been nearly cut in half to Los Angeles in just 5 weeks. Why?

Spot ocean container rates continue their descent, falling 7% this week to $2,368 per 40-foot container...

Container rates have been nearly cut in half to Los Angeles in just 5 weeks. Why?

LONDON — Spot ocean container rates continue their descent, falling 7% this week to $2,368 per 40-foot container, according to rate tracker Drewry.

As has been the case, drops in rates from China to the U.S. continue to be ramp up with each coming week. Rates from Shanghai to Los Angeles fell 8% to $2,906 and have now fallen 46% over the past five weeks. Rates from Shanghai to New York fell 7% to $4,038 and have now fallen 41% over the same period.

There’s lots of talk of frontloading to beat tariffs, and official import stats from ports show increased numbers as of January. So why are rates falling?

Perhaps it is due to strategy changes from ocean carriers.

“Ocean carriers have not controlled capacity by blanking sailings as aggressively as they otherwise would,” wrote Rachel Shames, vice president of pricing and procurement for customs broker CV International, in a blog post. “This can be mostly attributed to a desire to have a smooth rollout of the new alliances and service strings, as well as an effort for the new alliances to maintain market share.

“Increasing tariffs and uncertainty are certainly a factor in the slower market,” she continued. “Spot rates on Transpacific Eastbound lanes have fallen to levels not seen since early in the Red Sea crisis. Outlooks are murky. Blank sailings are increasing for April, but whether it will be enough to drive rates up is unclear.”

According to the National Retail Federation, retailers will ramp up their imports over the coming months in an effort to get ahead of more potential tariffs.

“The on-again, off-again tariffs against Canada and Mexico won’t have a direct impact on port volumes because most of those goods move by truck or rail. But new tariffs on goods from China that have already doubled from 10% to 20% are a concern, as well as uncertainty over ‘reciprocal’ tariffs that could start in April,” said Jonathan Gold, NRF vice president. “Retailers have been working on supply chain diversification, but that doesn’t happen overnight.”

As a result, NRF expects import numbers to fall in June and July.