Ocean rates plateau as air rates climb

Despite continued delays and disruptions, Asia-Europe ocean rates – along with those on all major trade lanes – were level this week, possibly suggesting the industry has reached its ceiling for spot rates, digital rates specialist Freightos noted today.

But demand is not showing any signs of easing for ocean freight anytime soon, and is growing for air cargo, where Asia-US rates have climbed about 25% to most destinations so far this month, the company noted. 

According to Freightos’ real-time daily rates – based on current rates being used by global logistics providers – with weekly averages published each Tuesday, China-US West Coast ocean freight prices were unchanged at $4,854/FEU, with this rate around 225% higher than the same time last year. China-US East Coast prices were also level at $6,203/FEU, and are 135% higher than rates for this week last year.

Freightos noted that ports, carriers, forwarders and shippers “continue to contend with the fallout from the Suez blockage, with delayed ships leading to additional cancelled Asia-Europe and Europe-US sailings announced for the coming weeks”. 

It acknowledged that “although many shippers will pay well above spot rates to actually secure a booking given current conditions, one positive indication that the worst of the latest crisis may be behind us is the levelling off of ocean rates across all major lanes this week, with the FBX Global Index going unchanged after more than a month of week-on-week increases”.  

Freightos added: “Reports that US consumer spending on services has finally started to grow offer a first sign that goods-driven demand for ocean freight will eventually ease.  But not very soon, as May is expected to be another extremely busy month on the transpacific and depleted inventories will mean elevated ocean volumes even after consumer demand eventually shifts back to services.” 

It highlighted that strong demand is being felt in air cargo as well, “where shipments including new electronics releases and rapid COVID testing kits are pushing air cargo rates up. Freightos.com marketplace data shows prices from Asia to the US have increased by about 25% to most destinations so far this month, and are hitting levels not seen since the tail end of the PPE rush last May.”

These observations are consistent with other reports by Lloyd’s Loading List, including observations today by Kuehne + Nagel CEO Detlef Trefzger and a report earlier this week that highlighted how air freight spot rates out of Asia have spiked again in the last few weeks, with prices from China and Hong Kong to the US rebounding back to and beyond their level in December to an average of US$8 per kilo.