November 19, 2024 Update | Freightos

Weekly highlights

• Asia-US West Coast prices (FBX01 Weekly) increased 3% to $5,345/FEU.    
• Asia-US East Coast prices (FBX03 Weekly) fell 1% to $5,395/FEU.
• Asia-N. Europe prices (FBX11 Weekly) increased 2% to $4,580/FEU.
• Asia-Mediterranean prices (FBX13 Weekly) increased 2% to $4,387/FEU.

• China – N. America weekly prices increased 28% to $7.01/kg
• China – N. Europe weekly prices increased 5% to $4.03/kg. 
• N. Europe – N. America weekly prices increased 9% to $2.60/kg.

Analysis

Last week, Canada’s Labor Minister ended the separate labor disputes – one on each coast – that had resulted in lockouts at Canada’s major container ports.  The Industrial Relations Board ordered operations to resume in Vancouver, Prince Rupert and Montreal, and sent operators and port worker unions to binding arbitration, with ports reopening late last week. The ILWU Local 514 in British Columbia has stated they will file legal challenges to these orders, though for now the disruptions on both coasts are over if not resolved.

Transpacific ocean rates have been stable for about a month now. Prices have eased significantly with the close of peak season pressure, with rates of about $5,400/FEU to both coasts 35% – 45% below peak levels in July. 

But when demand eased post the Lunar New Year rush back in April, rates fell back to $3,000/FEU to the West Coast and $4,300/FEU to the East Coast, marking the elevated rate floor – still about double 2019 levels – on this lane for the Red Sea-diversion era.  

Prices remaining significantly higher than in April may point to stronger than normal demand for this time of year due to shippers frontloading ahead of expected sharp tariff increases from the incoming US administration as well as a possible ILA strike at East Coast and Gulf ports after January 15th. And with Lunar New Year starting earlier than usual at the end of January this year, rates may face some additional pressure starting in late December or early January.

The unusual parity of transpacific rates to both coasts may point to some shift of demand to the West Coast due to January strike concerns. The ILA and USMX held face to face negotiations for the first time since June last week, but talks quickly collapsed as the parties remain far apart on the role automation and semi-automation will be allowed to play at the ports, increasing concern that a new contract won’t be finalized before the January deadline. 

Asia – Europe ocean rates – which, without strike or tariff concerns, had fallen back to April levels by mid-October –  increased by about 30% to start the month as carriers introduced GRIs, and so far those levels have stuck. And though some mid-month GRIs don’t seem to have taken yet, some carriers have also announced December increases aiming to push rates past the $6,000/FEU mark as an early start to the Lunar New Year rush may get underway. 

Carriers are particularly motivated to see prices increase on this lane as they enter tendering season for next year’s annual contracts with Asia – Europe BCOs.  Carriers are also adjusting their port call rotations on this lane in preparation for the alliance reshuffles that will take effect in February. 

In air cargo, Middle East – N. America rates have climbed 22% in the last three weeks to $3.78/kg, a high for the year. This increase may reflect a peak season bump on this lane as Thanksgiving approaches, and that some shippers are opting for sea-air transport from the Far East instead of direct air shipments, possibly to avoid the higher rates and tight capacity out of China due to the e-commerce surge. Middle East – Europe rates have remained steady at $2.00/kg. 

China – N. America rates have been at about $7.00/kg – a high for the year – since late October, for a 17% increase from the e-commerce volume-driven $6.00/kg level they’ve held for much of the year. And at $4.00/kg, China – Europe rates are just 6% higher than a month ago. 

Many were expecting rates on these lanes to have spiked, possibly to extreme highs, by now given the demand strength and strain on capacity seen even during the typical slow season this year. But carriers and forwarders report that though they remain very busy, they aren’t seeing peak conditions yet, and may not see much worse than current conditions as shippers planned and adjusted in advance to avoid peak season air cargo chaos.

Transatlantic rates have increased about 45% since mid-October to $2.60/kg, a 45% gain compared to last year and their highest level since early 2023, reflecting a reduction in capacity as carriers introduced winter passenger schedules as well as some shift of freighter capacity to ex-Asia routes.