Ocean rates continue to climb on increased volumes
Freight prices from China to the US rose further during the past week, but less dramatically than the previous few weeks as an increase in orders and restricted capacity continue to put pressure on prices.
Ocean freight rates from China to the US have continued to rise during the past week, but climbed less dramatically than the previous few weeks as an increase in orders and restricted capacity continue to put pressure on prices.
The latest figures from digital freight rates specialist Freightos indicate that average China-US West Coast prices climbed 6% since last week to $2,607 per FEU, taking prices higher than the November 2018 trade war, pre-tariff peak and 89% higher than the same time last year. It said China-US East Coast prices rose 3% since last week, reaching $3,267 per FEU, 28% higher than rates for this week last year.
Freightos noted that this “surprise mini-surge may have some ocean carriers hopeful for a potentially salvageable peak season”, highlighting that the latest tally of cancelled sailings for the third quarter (Q3) – including some recently reinstated ships – show only 6% of Asia-US arrivals in July have been removed, with a similar trend on Asia-Europe lanes.
These schedules would “set capacity well above the double-digit drop in imports that’s being projected for the quarter, with ocean capacity getting back to more normal levels by the end of July”, Freightos noted.
But it may indicate that that carriers are being more cautious about announcing their service schedules, and “by opting instead to update schedules as needed throughout the quarter instead of in advance, carriers may hope to be more nimble in responding to demand shifts and avoid big swings like this month’s as much as possible”.
“The recent increase in demand may have made ocean carriers more optimistic about the return of volumes: only 6% of capacity has been cancelled through July, much less than expected,” Freightos observed. “Fewer cancellations could also show that some carriers will opt to announce cancellations throughout the quarter instead of in advance, and try to avoid the mismatch of supply and demand that led to the June spike.”
Air and ocean freight contrast
Meanwhile, air and ocean freight rates “have reversed roles”, Freightos highlighted, noting that “while ocean rates climbed – nearly 60% since the end of May for China-US West Coast – air cargo rates out of China to the US have dropped 60% from their mid-April peak”.
Echoing the reports of various freight sources, it said the “capacity crunch and peak PPE demand that sent air rates more than 400% higher (in April and May) than the start of the year, have continued to normalize, sending prices back to earth”.
Freightos also noted that some shippers that have “been priced out of air by massive PPE orders may be responding to the falling rates”, as users of the company’s WebCargo service placed a record number of eBookings per week on the platform last week.
“This tale of two modes is one example of just how dramatic and varied the effects of the pandemic have been throughout the logistics landscape,” commented, Eytan Buchman, chief marketing officer at Freightos.
Source: Lloyds Loading List