Ocean rates stay high as retailers struggle to build stock

Freight rates remain at extremely high levels this week to a backdrop of “maxed out” capacity and demand being sustained at peak levels, according to the latest international freight update published by digital rates specialist Freightos, which incorporates the Freightos Baltic Index (FBX).

On the Asia-US West Coast trade lane, prices fell 3% on last week to $5,473/FEU but are still 218% higher than the same time last year and more than four times higher than this week in 2019.

Asia-US East Coast prices increased 1% to $7,481/FEU and are 173% higher than rates for this week last year.

Asia-North Europe rates climbed 7% to a new high of $8,945/FEU, and US East Coast-Asia backhaul prices spiked 25% to $1,022/FEU, Freightos' update noted.

North-Europe-US East Coast prices were down 1% to $4,274/FEU and are 131%  higher than the corresponding week last year.

The 'global FBX  rate was up 1% on last week at $5,027/FEU and up 238% year over year.

“The sustained demand driving these rates and overwhelming carriers means that even some containers booked on recently-signed and highly-elevated annual contracts are being rolled and that storage space for finished goods waiting to be shipped is becoming scarce,” commented Freightos' Research Lead, Judah Levine.

“And though US retailers are now spending more on inventory than in 2019, those items continue to fly off the shelves, keeping inventory levels at record lows. This means that businesses may still struggle to avoid stockouts come the holiday season. It could also mean that even if consumer demand for goods declines as services rebound, retail restocking will keep ships full and rates up for some time longer.

He added: “How high can freight rates climb? Some observers think market forces will keep prices climbing, pricing some shippers out as long as demand from higher-margin businesses keeps capacity tight. And as long as rates are market driven, the US Federal Maritime Commission cannot intervene on container costs.”

Sustained demand and limited capacity continues to keep air cargo rates extremely high too, Freightos' update also noted, with some carrriers introducing new peak surcharges to already elevated rates.