The underlying theme of ocean freight pricing in this quarter was stability, as opposed to the volatility that characterized ocean freight in 2016. According to the Freightos International Freight Index, the standard deviation for China – US (West Coast) prices between March and May 2017 was $69 (5% of the average price), compared to $450, or 30% of the average price, in Q2 2016.
Insufficient demand continues to constrain upward rate mobility, as demonstrated by the negligible pricing impact of the combined effect of Memorial Day, Dragon Boat day and congestion in Shanghai.
Following weak 2016 pricing and lower shipping volumes, logistics spend as a percentage of the US GDP dropped from 7.84% in 2015 to 7.5% in 2016. Meanwhile, US import changes from the expanded Panama Canal will gradually shift some 10% of West Coast imports to the East Coast.