Overnight, Japan's Nikkei picked up on this writing that indeed the cost of shipping between China and the U.S. plunged this week after hitting record highs in early September as the off-season approaches, a power crunch slows Chinese manufacturing and speculators rush to sell their hoarded shipping spots.

Citing an executive with a Shanghai freight company, Nikkei noted that the cost of shipping a 40-foot container from China to the U.S. West Coast dropped nearly half in the previous four days, going from about $15,000 to just over $8,000, while the spot rate for shipping to the East Coast had fallen by more than one-quarter from over $20,000 to less than $15,000.

Of course, we need some context here, and as a reminder, prior to the pandemic, the rate was usually around $1,500, and has since skyrocketed, due to excessive demand and lack of supply: on the demand side, U.S. consumers stuck at home have splurged on durable goods, such as gym equipment and furnishings. However, congestion at ports around the world led to a dearth of containers and speculation by scalpers looking to make a profit from rising prices.

This pushed container rates to record highs, however in the last week of September something finally snapped and the shipping rate on a route between China and the West Coast almost halved. The route is operated by Matson, one of the biggest U.S. container freight companies. Matson said it has nothing to do with the slump in spot shipping rates, and the Oct. 2 long-term rate for shipping a 40-foot container from China to the West Coast it reported to the Shanghai Shipping Exchange was up $200 from a month earlier.

Then there is the difference between spot and long-term rates: an analyst at Tianfeng Securities said that shipping companies often set the long-term rates, but the spot rates quoted by shipping forwarders are the actual market prices determined by supply and demand. Many long-term rates listed on the Shanghai Shipping Exchange for shipping a 40-foot container from China to the U.S. are under $5,000, much lower than the spot rates.