July 30, 2024 Update | Freightos

Weekly highlights

Asia-US West Coast prices (FBX01 Weekly) fell 1% to $7,628/FEU.    
Asia-US East Coast prices (FBX03 Weekly) climbed 3% to $9,824/FEU.
Asia-N. Europe prices (FBX11 Weekly) fell 1% to $8,369/FEU.
Asia-Mediterranean prices (FBX13 Weekly) climbed 4% to $7,796/FEU.

China – N. America weekly prices decreased 2% to $5.22/kg.
China – N. Europe weekly prices stayed level at $3.39/kg. 
N. Europe – N. America weekly prices fell 2% to $1.63/kg.

Analysis

Typhoon Gaemi wreaked havoc in the form of evacuations and deadly mudslides and flooding across the Philippines and Taiwan on Thursday and parts of southeast China into Friday.

The storm sank a cargo ship off the coast of Taiwan and grounded several others. Most flights were canceled out of Taiwan, and Chinese cities like Fuzhou, Quanzhou and Wenzhou through Friday, though by Saturday most flights had resumed in the region, as had rail transport though work continues to clear roads.

Ex-Asia ocean rates were about level last week, but rates from Asia to N. America’s West Coast remain 6% lower than in mid-July and to Europe prices have decreased 3% from their high for the year hit earlier in the month. These trends suggest that rates may have already reached their peak season high and could ease further.  Some carriers have also started reducing their surcharges for some S. Asia and Africa lanes, which may likewise indicate that more capacity is becoming available across networks as a result of easing conditions on the main trade lanes.

If rates have reached their peak, it may be partly due to easing congestion at Asian hubs and carriers continuing to add capacity to the main East-West lanes which together are removing some supply side pressure on ocean prices. More reports show that Asia – Europe utilization levels are decreasing, and a million more TEU of new vessel capacity is scheduled to enter the market before the end of the year.  

But the biggest contributor to easing rates may be the early start to peak season for North America and Europe. The earlier than usual start to an increase in international freight back in May – as many shippers sought to take longer sailings into account and avoid Red Sea-driven delays closer to the holidays, or move shipments before new tariff roll outs or ahead of potential labor disruptions for US East Coast shippers – may already be resulting in an early easing of peak season demand and the tight space and climbing spot rates that came with it.  Longer lead times mean, for example, that shippers from Asia to the US East Coast need to move their last orders now to receive them before a possible port worker strike in October. 

Even as volumes have increased since May, destination ports in N. America or N. Europe have not had significant congestion or delays as a result. And if peak volumes are already on their way, US West Coast ports report being ready for them or any other surge including a possible shift of volumes away from the East Coast in the event of a strike in October.

In air cargo, Freightos Air Index rates show prices ex-China were stable last week, but expectations remain that increased demand for e-commerce shipments  – already keeping rates elevated in the off season – and other goods in Q4 will mean a strong air cargo peak season. 

Prices out of S. Asia dipped 8% to N. America last week to $4.87/kg and to Europe prices have decreased 10% in the last month to $3.66/kg after remaining level and very elevated since April. This recent decrease may likewise reflect some easing in ocean conditions and some dip in volumes that had shifted from ocean to air and put pressure on rates starting in early Q2 as a result of Red Sea disruptions to ocean operations.