SIMIC

One US importer said it recently reduced by 15 to 20 per cent ocean contract rates signed several months ago. He expected further reductions later this year. "Things are trending in favour of the importers," he said.

San Francisco-based forwarder Flexport says more shippers jettison contract rates altogether in favour of the spot market.

High-price freight contracts that were written when carrier capacity was tight and a rush to restock inventories was in full force are losing their shine as slowing demand and a weaker US economy send rates south.

Some companies now are renegotiating shipping agreements they struck at the height of the Covid-driven surge in freight demand or are dipping into the spot market to take advantage of lower rates.

The situation is a sharp turnaround for shippers who at the start of 2022 were willing to pay record-high contract rates to guarantee space on containerships ahead of this year's fall and winter peak shipping seasons following severe delays and inventory shortages through much of 2021.

Long-term rates to ship goods from China to the US west coast almost tripled between June 2021 and June 2022 to US$7,981 per container, according to Xeneta, a Norwegian transport data and procurement firm. Short-term rates began to fall in March of this year and in June dropped below long-term rates.