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May 15, 2024 Update

The Freightos Weekly Update helps you stay on top of the latest developments in international freight by giving you the rundown on the latest economic data, ocean and air demand trends, rate data – and anything else impacting the market.

Judah Levine

Weekly highlights

Ocean rates – Freightos Baltic Index

  • Asia-US West Coast prices (FBX01 Weekly) increased 14% to $3,873/FEU.
  • Asia-US East Coast prices (FBX03 Weekly) climbed 8% to $5,093/FEU.
  • Asia-N. Europe prices(FBX11 Weekly) increased 17% to $4,151/FEU.
  • Asia-Mediterranean prices(FBX13 Weekly) increased 17% to $5,179/FEU.

Air rates – Freightos Air Index

  • China – N. America weekly prices increased 8% to $5.86/kg.
  • China – N. Europe weekly prices fell 12% to $3.60/kg
  • N. Europe – N. America weekly prices fell 2% to $1.73/kg.

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Analysis

Ex-Asia ocean rates climbed sharply last week as early month GRIs took hold – with additional significant increases possible in the coming days from mid-month GRIs and surcharges – as unseasonal increases in demand combine with already-stretched capacity due to Red Sea diversions that require the use of more ships and are still causing congestion in places like the West Mediterranean and S. Asia

Recent increases in Asia – Europe volumes during what is normally a slow season for ocean freight, surprised many carriers and may point to the beginning of a restocking cycle for European importers. The demand increase is resulting in reports of rolled containers and full ships through the end of the month. 

With capacity already tight due to Red Sea diversions, rates last week climbed to $4,151/FEU to N. Europe and $5,179/FEU  to the Mediterranean for about a 20% increase from their already-elevated floors reached in March and April. With carriers announcing additional $1,000+/FEU GRIs or peak season surcharges for the coming days, prices may be set to climb even higher.

On the transpacific, the National Retail Federation projects that US monthly ocean imports will climb above the two million TEU mark in May and peak at 2.1 million in August suggesting we’re already in the start of an early peak season. This early increase may reflect pulled-forward demand to avoid Red Sea-caused delays later in the year or due to concerns that East Coast and Gulf port labor negotiations, which will get underway soon, could result in disruptions during the typical peak season months.

Like in N. Europe, this demand increase while capacity is already scarce is pushing transpacific rates up sharply with West Coast prices up 33% from the April floor to $3,873/FEU last week and East Coast rates up 19% compared to April to $5,093/FEU. As space tightens, forwarders are seeing their allocations reduced sharply and carriers are seeking to increase rates further on mid-month GRIs this week.

Climbing ocean rates and rolled containers could contribute to a further Red Sea-driven ocean to air shift of some volumes. The impact of this shift on air cargo rates, though, could be mitigated somewhat by summer travel’s additional passenger flights adding cargo capacity to the market. 

The biggest driver of elevated air cargo rates out of China – Freightos Air Index rates out of China were at $5.86/kg to N. America and $3.60/kg to N. Europe last week – has been the surge in B2C e-commerce shipment volumes. But Temu, one of the major platforms responsible for this trend, will reportedly start pulling back from the US market following various legislative challenges, which could free up significant capacity on this lane. 

In labor news, Canada’s Minister of Labour temporarily blocked a rail strike planned for next week. In the meantime, ocean carriers are announcing contingency plans, including diversions to other West Coast ports in the event of a strike.

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Judah Levine

Head of Research, Freightos Group

Judah is an experienced market research manager, using data-driven analytics to deliver market-based insights. Judah produces the Freightos Group’s FBX Weekly Freight Update and other research on what’s happening in the industry from shipper behaviors to the latest in logistics technology and digitization.

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