Weekly highlights
Asia-US West Coast prices (FBX01 Weekly) fell 6% to $6,459/FEU.
Asia-US East Coast prices (FBX03 Weekly) fell 2% to $9,480/FEU.
Asia-N. Europe prices (FBX11 Weekly) fell 1% to $8,343/FEU.
Asia-Mediterranean prices (FBX13 Weekly) fell 6% to $7,493/FEU.
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Analysis
A massive container explosion on a vessel docked at the Port of Ningbo on Friday – the most destructive of several recent container fires – closed the port’s Phase III Terminal for 60 hours over the weekend. This disruption will likely add to some persistent congestion at the port , though the latest report from Hapag-Lloyd shows vessels are waiting a relatively moderate 2.5 days to dock.
Political unrest in Bangladesh led to widespread transportation and manufacturing closures early last week. By mid-week though, the major airports had resumed full operations, cross-border trucking re-opened, and many garment factories had returned to work. The Port of Chittagong, Bangladesh’s major container hub, closed briefly and then operated below capacity for much of the week. As a result, and together with interruptions since early June, congestion has worsened at the port as logistics and manufacturing stakeholders now work to clear backlogs.
Congestion at some of North Europe’s major container ports has reportedly gotten worse in the last couple weeks leading some carriers to omit certain port calls in the region, but does not appear to be causing significant delays. In N. America, some East Coast ports are reporting delays due to last week’s hurricane, but otherwise operations remain stable.
Building port congestion in N. Europe may make sense given Asia – N. Europe ocean rates have been at about $8,300/FEU – their high for the year – since early July as shippers seek to finish moving peak season goods earlier than usual to account for longer Red Sea-driven lead times.
But plateauing prices on this lane as well as from Asia to the US East Coast and the Mediterranean, and rates to the West Coast that are now 20% below their July high, suggest that demand is already at or just past its peak level for the year.
Similarly, the latest US ocean import data from the National Retail Federation projects arriving volumes will peak in August. Monthly imports are expected to start to ease in September – earlier in the year than usual – and decline further through Q4. But these September volumes would still be 6% higher than last year, which – on top of the significant share of overall capacity that will still be absorbed by Red Sea diversions – could mean rates will decrease more gradually and not as low as many shippers might hope.
In labor developments, last week Canada’s labor relations board issued a ruling allowing a rail worker union strike. Rail carriers announced shortly thereafter that they will lock out union employees if an agreement is not reached before August 23rd. In the US, the East Coast and Gulf port labor union and port operators remain far apart in their demands as their September 30th deadline approaches.
Some observers are concerned that an East Coast port strike could lead not only to renewed disruptions and upward pressure on rates for ocean freight, but also to a surge in a demand for air cargo out of Asia where Freightos Air Index data shows e-commerce volumes are already keeping capacity tight and rates elevated during what is meant to be slow season months for air cargo.
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