Carriers are finally achieving some measure of relief in freight rates as vessel load factors improve with the approach of Chinese New Year. Spot rates on the Shanghai Containerized Freight Index spiked to both the West and East coasts this week in advance of the two-week celebrations that begin on Feb. 8.

The spot rate for shipments from Shanghai to the West Coast increased to double the previous week. The spot rate from Shanghai to the East Coast has increased 45%.

Freight rates globally have declined steadily in recent months due to increasing vessel capacity and soft demand. According to Global Port Tracker, container volumes at the top 30 ports around the world declined 0.9 percent in the third quarter of 2015 compared to the same period in 2014. However, total capacity in 2015 increased 8 percent from the previous year.

Conditions have been more favorable in the eastbound Pacific, with U.S. imports from Asia increasing last year by an estimated 5.1 percent from 2014. Nevertheless, carriers continued to deploy larger vessels in the Pacific, including calls in Los Angeles in late December by the Maersk Edmonton, with a capacity of 15,000 20-foot container units, and the 18,000-TEU CMA CGM Benjamin Franklin.

By Mid-December, spot freight rates to both the West and East coasts were down 40-60 percent from the same weeks the previous December. In order to stem the drop in freight rates and loss of revenue, carriers in the Transpacific Stabilization Agreement in November announced their intention to achieve certain minimum rates on Dec. 1, and they proposed even higher rates in the form of a general rate increase to take effect on Jan. 1, Jan. 15th and Feb.1.

This week’s increase in the average spot rate indicates that the proposed minimum rates are having an impact, TSA spokesman Niels Erich said Monday. TSA is a discussion group of 15 of the largest carriers in the eastbound trade from Asia.

Also, the approach of Chinese New Year, when many factories in Asia close for at least two weeks, is likely having an impact as well. Factories usually speed up production and ship as many orders as possible in the month leading up to the celebrations.

Similar developments are occurring in the Asia-Europe trade, where the SCFI showed rates this week almost doubling to $1,000 per TEU.

Although spot rates could remain elevated through January until the final shipments leave Asia during the week ending Feb. 8, rates are expected to drop again, certainly in mid-February. Carriers will most likely attempt to reduce weekly capacity through ad-hoc cancellation of sailings, known as blank sailings. However, with vessel capacity expected to exceed demand well into 2016, freight rates will most likely remain under pressure much of the year.