A fierce freight rate war is unfolding on the Asia-US West Coast trade route. New trans-Pacific carriers, eager to capture market share, are offering lower freight rates, forcing established mainline operators to reduce their rates to retain customers.

According to the latest report from Linerlytica, freight rates from Shanghai to the US West Coast dropped to $5,955 per 40-foot container on August 23, a 10% decrease from the previous week, with actual rate reductions exceeding $1,000. Linerlytica noted that some smaller carriers and new entrants in the industry are aggressively cutting rates to increase volumes, compelling larger competitors to follow suit.

In this rate war, intra-Asia shipping company TS Lines is one of the new entrants on the trans-Pacific route. The company has joined SeaLead Shipping (itself a returning player to the trans-Pacific market) in operating an Asia-US West Coast route, and has launched its own independent Asia-US West Coast service, AWC2, connecting Nansha, Shekou, Kaohsiung, Xiamen, and Long Beach.

Similarly, Wellbo (Hong Kong) International Shipping Ltd., another new player in the trans-Pacific route, has also increased its capacity on the China-US West Coast route this month by chartering two 2,700 TEU vessels, the "Pona" and the "Posen," for a three-and-a-half-year period, demonstrating its strong commitment to this route. Notably, Wellbo Shipping is a subsidiary of Tangshan Port Group in China and officially entered the trans-Pacific trade in March, launching a route from Shanghai to Los Angeles.

Looking ahead to the next month, Linerlytica presents a mixed outlook. Carriers hope to shift cargo from the US East Coast before a potential dockworker strike in October to boost market growth. However, last week’s brief rail strike in Canada did not materially impact port congestion, although ports in the Pacific Northwest continue to struggle with increasing inbound rail volumes.

On the other hand, there are signs that vessel utilization rates on the Asia-US East Coast route are declining as shippers shift containers to avoid any disruption from potential strike action on the US East Coast. This trend could help container liner companies raise freight rates on the Asia-US West Coast route in September, a goal they failed to achieve in August.