Freight Insights Freightos Index Update General

Supply Chains (And Freight Rates) Crank Up Again: Freight Rate Update W1

Weekly update article on the Freightos International Freight Index exploring rate trends and their driving forces.

As supply chains crank back into action following the vacation, the January ocean freight GRI (General Rate Increase) stuck, with China-US rates increasing by 27%. While prices may continue to climb slightly until the Chinese New Year, expect them to drop back after February 16.

Zvi Schreiber, CEO of Freightos,

 

“The effective GRI on FCL in January has been about $300 for China-US West Coast, and $500 for China-East Coast, but we believe the lift from this and two more GRIs coming up won’t last. It seems oversupply will keep ocean freight prices low for the foreseeable future, as evidenced by a lackluster peak season.

The situation is better for air freight. Increased demand, particularly from increased cross-border e-commerce, is applying an upward pressure on prices.

Shippers should factor longer air freight peak seasons and increased air costs hikes into their planning. In some instances, this might tip the balance back toward ocean freight.”

Air Freight Pricing

Recent snowstorms on the US eastern seaboard and severe storms in Europe have taken a toll. Expect cargo backlogs to return, with rates only dipping a little until mid-January, when the Chinese New Year runup begins.

Manel Galindo, CEO of Freightos WebCargo,

 

“In recent years, the pre-Chinese New Year squeeze has pushed air cargo rates up from around US$6-7/kg to around $10-12/kg, but larger backlogs this year might see it going even higher. For large shipments and urgent shipments to get out on time, they will likely be looking at rates around US$15-20/kg.”

Ocean Freight Pricing

TRADE LANE THIS WEEK LAST WEEK WOW CHANGE YOY CHANGE CAPACITY
China-US West Coast  $1,462  $1,150 27% -30% Manageable
China-US East Coast $2,369 $1,869 27% -23% Manageable
China-Europe $1,625 $1,600 2% -34% Manageable
China-Mediterranean $1,343 $1,261 7% -28% Manageable
Europe-US East Coast $1,420 $1,127 26% -9% Manageable
Europe-South America Atlantic $849 $836 2% 24% Manageable
Europe-South America Pacific $1,438 $1,425 1% 3% Manageable
FIGURE 1: FREIGHTOS INTERNATIONAL FREIGHT INDEXES (MAJOR LANES) WEEK ON WEEK AND YEAR ON YEAR
  • The January 1 GRI is riding the back-to-work increase in shipments, with an average GRI effect of $300 for China-US West Coast and $500 for China-US East Coast pushing prices up by 27% this week. Space isn’t tight as of yet.
  • However, the GRI has been less effective so far than last year, and prices still lag last year’s rates (30% down for West Coast, 23% down for East Coast).
  • Same goes for China-Europe’s early January price spikes for both years. Although prices jumped a little this week, the year on year comparison deteriorated. Space will tighten closer to CNY, so expect prices to go up again.
  • Europe-US East Coast rates jumped 26% and are now the closest they’ve been since October to last year’s prices.
China US East Coast index
FIGURE 2: EVEN THOUGH CHINA-US WEST COAST PRICES JUMPED THIS WEEK, THEY ARE STILL DOWN ON THIS TIME LAST YEAR

About The Freightos International Freight Index

Unlike other freight indexes, the Freightos International Freight Index (FIFI) uses aggregated and anonymized real-time business data from global carriers, forwarders and shippers on the Freightos AcceleRate freight rate management platform. That’s why we believe these indexes to be the most accurate and real-time representation of market rates available. What’s more, it’s offered for free.