July 16, 2024 Update | Freightos

Weekly highlights

Asia-US West Coast prices (FBX01 Weekly) increased 2% to $8,101/FEU. 
Asia-US East Coast prices(FBX03 Weekly) climbed 9% to $9,620/FEU.
Asia-N. Europe prices(FBX11 Weekly) increased 3% to $8,632/FEU.
Asia-Mediterranean prices(FBX13 Weekly) stayed level at $7,747/FEU.

China – N. America weekly prices stayed level at $5.57/kg
China – N. Europe weekly prices stayed level at $3.38/kg. 
N. Europe – N. America weekly prices fell 1% to $1.58/kg.

Analysis

Ocean spot rates increased last week to highs for the year on the major tradelanes. But the pace of the climb has slowed after sharp early month increases. And there are signs that prices may have already reached their peak as daily rates so far this week are ticking lower and major carriers have not announced surcharge increases for later this month or August on these lanes. 

Global monthly volumes surpassed a pandemic-era record in May and the National Retail Federation projects that strong US ocean import volumes – reflecting retailer expectations of consumer strength in Q4 despite some signs of a pull back in spending –  will peak in August. 

If arriving imports do peak next month then the N. American market may already be feeling the most pressure on rates and networks or will in the next few weeks.  And peak season pressure – which started earlier than usual this year – would also ease earlier than usual, by September.

The recent addition of more capacity to the transpacific including regional carriers entering long haul trade may also be playing a part in reducing pressure on rates, with reports that some carriers are already offering rate reductions to keep vessels full. 

Peak season may come to an early close for European importers as well. Asia-Europe utilization levels have slipped recently, and Red Sea diversions that mean longer transit times for European shippers also mean holiday season goods need to be shipped by the end of September at the latest. High freight rates are also pricing some lower margin shippers out of the market, which could be removing some demand too. Pressure may be easing on intra-Asia trade as well.

Despite volumes likely reaching their peak, there is still no significant congestion at destination hubs from increased import traffic.  Recent reports or congestion at some US ports are likely due to July 4th labor slowdowns and disruptions from hurricane Beryl.

Congestion is still a factor in Singapore and has led to some spillover to Malaysia. But overall delays have decreased, with vessel wait times under two days in Singapore. Shorter wait times at China’s hubs – with congestion there driven by late arrivals from delays at other ports in the region – are also a good sign that system-wide congestion and delays are decreasing.

Other factors, though are or could lead to other supply-side disruptions. 

Bad weather off the coast of South Africa through the end of last week impacted transits through the region.  In labor news, one driver for the early start of peak season demand to North America – the concern for an ILA strike at East Coast and Gulf ports – may be getting closer. In Germany, port worker strikes slowed operations for three days at several ports last week, and in Canada, the Industrial Relations Board is expected to issue a ruling by August 9th that could allow rail workers to strike with 72-hour notice.

In air cargo, strong e-commerce volumes continue to be the major driver of elevated rates to N. America and Europe. And though some observers think the pull forward of peak season ocean volumes could mean less air cargo demand in Q4, current persistent e-commerce volumes in what is typically slow season for air cargo – and that are keeping China export rates elevated at $5.57/kg to N. America and $3.38/kg to Europe –  will likely mean more pressure on space and rates later in the year.