Drewry WCI Extends Rally to $4,127/FEU as Transpacific Holds 18-Month High and Asia-Europe Tightens Further

The Analysis

Drewry's weekly release puts the World Container Index at $4,127 per 40ft container for the week to June 25, up 4% and the third consecutive weekly gain. That is a fresh 18-month high. The lanes underneath it: Shanghai-Los Angeles at $5,421 per FEU, Shanghai-New York at $7,012, Shanghai-Rotterdam at $4,512, Shanghai-Genoa at $6,001. Give me the numbers, not the feeling, and the numbers say this curve is still climbing rather than flattening.

Three things are pushing it. Carriers are pushing July 1 GRI increases. Shippers are pulling cargo forward ahead of the Section 122 surcharge expiration window on July 24, which turns July into a race rather than a season. And bunker-fuel adjustment is moving with it. On top of that, carriers are stacking PSS surcharges of $500 to $1,500 per TEU on Asia-Europe and the transpacific for July sailings. If you are booking July volume, this is the week the arithmetic changed.

Start with the base, because the base is where a number usually goes soft. The $4,127 is per 40ft container, and it is an index average across lanes, not a quote you can book. The lanes most of the exporters reading this actually use sit above the average: $5,421 to Los Angeles and $7,012 to New York. Rotterdam at $4,512 is below the index; Genoa at $6,001 is well above it. A shipper moving to the US East Coast pays close to 70% more per box than a shipper moving to Rotterdam in the same week. If your planning slide says the index is up 4%, you are planning with someone else's number. Your number is your lane.

Why now, and not in May. The July 1 GRI is a calendar event, which means carriers can plan around it, and so can you. The Section 122 surcharge expiration window on July 24 is a deadline, and deadlines move cargo: an importer who can pull an August booking into July will try, and that frontloading lands on July sailings instead of August ones. Bunker-fuel adjustment rides on top and moves with fuel, not with demand. Two of the three drivers have a date attached to them. A date is something you can act on. A market mood is not.

Who feels it first, and who barely feels it. Anyone booking July sailings on the transpacific or Asia-Europe without a locked rate is exposed on the next booking. Anyone holding a quarterly or annual contract with a BAF or index-linked clause feels it at the next adjustment, usually the following month and usually at a fraction of the spot move. Importers in high-value, low-volume categories, consumer electronics and seasonal apparel, carry it as a margin item they will argue about internally. Bulk and low-value commodities where freight is under 5% of landed cost barely register a 4% index move. The pain is not proportional to volume. It is proportional to how much of your cost sits in the ocean leg.

Here is the part the headline did not say. The index is quoted per FEU, which is 40 feet. The PSS carriers are announcing is quoted per TEU, which is 20 feet. A 40ft container is two TEU. So a $1,500 per TEU surcharge is $3,000 on the box you are actually booking, and a $500 per TEU surcharge is $1,000. When a carrier announces up to $1,500, the number that lands on your invoice for a 40ft container is up to $3,000 over base. Read the unit before you read the emotion. It is also why two shippers can look at the same announcement and disagree about whether it is a rounding error or a budget problem: one read TEU, the other read FEU.

The timing carries the same trap. The GRI is effective July 1. The PSS applies to July sailings. The Section 122 window closes July 24. Cargo that sails July 3 can be touched by all three. Cargo that sails June 30 avoids all three, provided the carrier's own effective-date wording attaches to the sailing date and not the booking date. Four days of sailing date is the gap between base rate and base rate plus a GRI plus a PSS. That is your transmission time: not weeks, a sailing date.

Let us put a number on it. Assume one 40ft container, Asia to the US West Coast, base at the index level of $5,421. Assume the carrier applies a mid-range PSS of $1,000 per TEU to July sailings. Assume the July 1 GRI lands at 4% on the base, using the index move as a simplifying assumption rather than a promise. The PSS is $2,000 on a 40ft box. The GRI is about $217. Total uplift is roughly $2,217 per FEU, which is about 41% over the $5,421 base. For a shipper moving 200 FEU in a month, that is roughly $443,400 of cost that was never in the budget. Change one thing, book the same tonnage as two 20ft units instead of one 40ft, and the surcharge math follows the unit count rather than the volume. This is why the unit matters more than the percentage.

The mistake I see most often is treating the headline number of the announcement as the invoice number, and treating the effective date as a single date when it is usually per sailing. Read three things before you accept a July rate: the unit the surcharge is quoted in, the sailing date the surcharge attaches to, and whether the GRI, the PSS and the BAF are being applied cumulatively or one instead of another. Get those three in writing and the negotiation becomes arithmetic instead of an argument.

There is no reason to take July pricing passively. All three dates are published, which means all three are plannable. A booking that sails before July 1 skips a stack that a July 3 booking pays, provided the effective wording is tied to the sailing date. That is not a market call. It is a calendar call, and copies of the calendar are free.

A carrier's surcharge announcement is the only document in this trade that reads better the less of it you read. Lock the rate before your sailing date crosses July 1; after that you are not negotiating, you are accepting.

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— By Vivian Zhao