Ocean freight rates plummet amid China chaos

Container freight rates on the trans-Pacific took another hit this week  as acrimonious negotiations between China and the United States turned into a full-blown trade war.

Prices on the benchmark Asia-U.S West Coast route fell 8% to $1,431 per forty foot equivalent unit for the week ending Oct. 10, according to the Freightos. Baltic Index. Asia-U.S East Coast rates also declined 8%, to $3,015 per FEU.

The weakening market came in the lead-up to new U.S. port fees on Chinese ships taking effect Oct. 14, and a matching tonnage tax implemented by Beijing on U.S.-flagged, -built and -operated vessels. The latter extend to vessel operators with 25% or greater U.S. ownership – a move seen as particularly onerous for publicly-listed ship operators who have to sort out their ownership structures.

The crisis saw the departure of U.S.-based directors from three shipowners — one from dry bulk specialist Pacific Basin Shipping (2343.HK) of Hong Kong, two from Greek tanker owner Okeanis (NYSE: ECO), and one from Danaos Corp. (NYSE: DAC), also of Greece, a containership owner that charters large ships to Maersk, CMA CGM and Hapag-Lloyd (HLAG.DE), among others.