Weekly update article on the Freightos International Freight Index exploring rate trends and their driving forces.
Early week snowstorms at major airports (like Frankfurt and Atlanta) continue to play havoc, while peak air season may extend into February. Rates have been stabilizing, but by the time pre-Christmas backlogs are cleared, the Chinese New Year surge will kick in.
Companies with annual carrier tenders have made up for having above-market rates earlier this year. However, those depending on the spot market have seen standard peak rates nearly triple.
Beyond bad weather and peak season, there are several other contributing factors for the air freight increase, including brisker world trade, burgeoning cross-border e-commerce, and air freight growth for several non-retail sectors.
According to Zvi Schreiber, CEO of Freightos,
“The air freight spot market is playing an increasingly prominent role in holiday supply chains. This peak season proves that uncertainty is the new norm, making it more important than ever to increase supply chain agility with a broader selection of providers, modes, and routes. On-demand capacity allocation and pricing plays a critical role in making this happen.”
Four weeks ago, soon after Europe’s air congestion began, China-Europe rates started catching up with last year’s levels (although they still lag 12% behind). Modal change is likely a contributing factor. By contrast, China-US rates are stuck around 30% behind last year’s rates.”
FIGURE 1: LAG ON 2016 RATES BY TRADE LANE (Source: Freightos International Freight Index)
Despite peak season surges in demand, and growing demand throughout 2017, ocean freight rates have declined throughout the year. This week, transpacific rates slid back as December 1 GRIs lost traction. Some carriers have persevered with mid-month GRIs. We expect these, as well as the January 1 GRIs, to be modest and fleeting.
Core Lane Pricing:
|TRADE LANE||THIS WEEK||LAST WEEK||WOW CHANGE||YOY CHANGE||CAPACITY|
|China-US West Coast||$1,000||$1,012||-1%||-29%||Available|
|China-US East Coast||$1,669||$1,769||-6%||-30%||Available|
|Europe-US East Coast||$1,127||$1,102||2%||-30%||Available|
|Europe-South America Atlantic||$825||$784||5%||22%||Available|
|Europe-South America Pacific||$1,425||$1,043||37%||-6%||Available|
FIGURE 2: FREIGHTOS INTERNATIONAL FREIGHT INDEXES (MAJOR LANES) WEEK ON WEEK AND YEAR ON YEAR
Key Points By Lane
- China-US West Coast rates dropped slightly (-1%), and are still well behind (-29%) last year’s rates.
- China-US East Coast rates also dropped (-6%), and are still well behind (-30%) last year’s rates.
- This week’s 9% rise sees China-Europe rates continue to catch up on last year’s rates – from being 25% behind four weeks ago to only being 12% behind last week.
- Europe-US East Coast rates rose modestly, stemming a four-week drop, but stayed a full 30% lower than last year’s rates and slightly less than half this year’s high ($3,549 in W5 and W6).
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.