June 11, 2024 Update | Freightos

Weekly highlights

Asia-US West Coast prices (FBX01 Weekly) increased 17% to $5,888/FEU.   
Asia-US East Coast prices (FBX03 Weekly) climbed 12% to $7,516/FEU.
Asia-N. Europe prices (FBX11 Weekly) increased 23% to $6,163/FEU.
Asia-Mediterranean prices (FBX13 Weekly) climbed 24% to $6,971/FEU.

China – N. America weekly prices increased 3% to $5.57/kg.
China – N. Europe weekly prices fell 12% to $3.40/kg. 
N. Europe – N. America weekly prices fell 2% to $1.66/kg.

Analysis

An early start to ocean peak season – driven by signs of economic recovery in Europe and, in N. America, by a mix of concern over Red Sea delays later in the year, a rush to pull forward goods from China before new tariffs take effect, and the threat of Q4 labor disruptions – together with capacity stretched thin by Red Sea diversions and the resulting, worsening port congestion continued to push ocean rates up sharply last week.

Prices from Asia to N. America West Coast are approaching $6k/FEU and have passed $7,500/FEU to the East Coast, with rates for each lane about $1,000 higher than their peaks earlier in the year when the lead up to Lunar New Year coincided with the start of the Red Sea crisis. 

Rates from Asia to the Mediterranean are back to their Q1 peak of about $7,000/FEU with prices to N. Europe $500 above their January mark at more than $6,000/FEU. Further significant increases are likely both to Europe and on the transpacific as carriers announce Peak Season Surcharge increases to as much as $2,000/FEU for mid-June and to start July.

While high demand and spot rates are driving some carriers to re-enter or add services to the transpacific, others are canceling services to reallocate capacity to Red Sea lanes.

The recent increase in port congestion, especially at the ports of Singapore and Barcelona, has led to estimates that about half of all Asia – Europe sailings experienced delays last week. These delays are causing an increase in blanked sailings as vessels miss their scheduled departures and the delayed arrivals are also leading to vessel bunching and congestion at downstream ports like Shanghai and Qingdao.

The big culprit for the primary congestion at the hardest hit hubs is the increased use of these ports for transshipment to shorten the long-haul vessel loops or for schedule recovery when carriers fall behind and omit port calls.

Congestion in Singapore has eased slightly, possibly as a result of increased productivity from the reactivation of a container terminal there, though delays have increased at nearby ports in Malaysia.  In Barcelona port operators are increasing working hours to try and reduce the backlog. 

Aside from Barcelona, destination ports in N. Europe and N. America are not reporting significant congestion yet. Disrupted schedules at origins could lead to some vessel bunching at these hubs at some point, but, with elevated volumes still expected to be seasonal and not at the levels seen during the pandemic, destination ports may be able to avoid extreme levels of congestion and delays.

Some observers expect the latest increase in ocean disruptions and rates to push some demand to air cargo. However, Freightos Air Index rates out of the Middle East and S. Asia have been stable since at least mid-May. Prices from China to N. America ticket up by 3% to $5.57/kg and to Europe rates eased 12% to $3.40/kg.