Freight Rates Are Down, But Carriers Have Something To Be Thankful For.
The annual peak season rush typically sees spiking freight rates well into November.
The rush is still there this year. Shipments are up on last year with delays expected in US ports this week. Customs are operating at max capacity and anything arriving on Wednesday will not get out until next week.
And rates did hit a GRI spike in early November. But carriers were probably hoping for rates to stick more than they did, given rates are 30% down on this time last year. However, China-US West Coast 40’ rates are already back where they started in late October, before the GRIs. In other words, rate movement simply followed the mid-month GRI rate erosion pattern Freightos recently quantified.
While rates are down, it still looks like carriers will be giving thanks, as it is looking likely that the FMC will scrap carrier filing requirements. For carriers, this measure would cut through red tape. And if carriers no longer have to give 30 days notice before increasing prices, this will arguably free up market forces.
In the short run, of course, rates won’t be affected. Despite demand being up on last year, the market is still in a period of chronic oversupply.
Key Points By Lane
- Despite being well into peak season, China-US West Coast rates dropped 9% this week, and now lag a massive 31% behind rates this time last year. In fact, rates have lagged behind 2016’s since early September (see below).
- Similarly, China-US East Coast rates dropped (5%) this week and are lagging (29%) behind last year’s rates.
- Even though space is tighter on the China-Europe than other lanes, the planned mid-month GRI didn’t materialize. Overall, rates are unchanged from last week.
- Europe-US East Coast rates dropped 3% this week and are 14% behind where they were this time last year.