[Freightos Weekly Update] Frontloading continues to put pressure on transpacific rates

Key insights:

1. Transpacific ocean rates increased slightly last week and are about 15% higher than at the start of December as frontloading ahead of expected tariffs is keeping vessels full. Carriers will seek to increase rates further in early January as pre-Lunar New Year demand picks up.

2. Transatlantic rates may increase mid-January on announced disruption surcharges from a possible ILA strike. MSC announced a $2,000/FEU disruption charge for this lane due to expected challenges from the new alliance roll outs.

3. Asia - Europe/Mediterranean rates have eased slightly from early December levels despite some congestion at European hubs from recent bad weather.

4. Red Sea diversions are still the biggest contributor to rates that remain at least double their level a year ago. And though no military intervention has succeeded in restoring security yet, both Israel and the US increased direct strikes on Houthi positions in recent days.

5. In air cargo, transpacific and transatlantic rates have started to ease from highs earlier in the month as the end of peak season approaches, with China - Europe prices still elevated last week at almost $5.00/kg.

6. Some observers think frontloading ahead of tariffs will keep air cargo rates elevated into 2025, and that tariffs could mean stronger overall global air cargo volumes if intra-Asia shipments of Chinese components increase significantly.

Ocean rates - Freightos Baltic Index:

• Asia-US West Coast prices (FBX01 Weekly) increased 4% to $4,452/FEU.

• Asia-US East Coast prices (FBX03 Weekly) increased 2% to $5,932/FEU.

• Asia-N. Europe prices (FBX11 Weekly) fell 2% to $4,971/FEU.

• Asia-Mediterranean prices (FBX13 Weekly) fell 1% to $5,721/FEU.

Air rates - Freightos Air index

• China - N. America weekly prices fell 19% to $5.86/kg.

• China - N. Europe weekly prices increased 40% to $4.92/kg.

• N. Europe - N. America weekly prices decreased 9% to $2.75/kg.

Analysis

Transpacific ocean rates increased slightly last week and are about 15% higher than at the start of December on successful mid-month GRIs.

Rate increases and reports of full vessels this far ahead of Lunar New Year probably reflect shippers continuing to pull forward volumes ahead of President-elect Trump’s promises of tariff increases next year – with Trump this week proposing the US should reclaim the Panama Canal in response to growing Chinese influence there.

Carriers are hoping the addition of pre-LNY demand in January will support further rate hikes to start the new year on GRIs of $1,000 - $3,000/FEU. Despite strong volumes and some signs of strain on rail, operations at US ports remain smooth and operators report being prepared for further volume increases.

Transatlantic rates, which have been stable since about mid-October, may also increase in January as some carriers have announced disruption surcharges for mid-month in anticipation of an ILA port worker strike. Some are also expecting the February alliance reshuffle to cause some disruptions, with MSC announcing a $2,000/FEU disruption charge starting January 18th for transatlantic containers.

Asia - Europe and Mediterranean container rates have eased 3% - 7% from levels reached on early December GRIs, with no noticeable mid-month increases despite schedule disruptions from recent bad weather leading to some moderate congestion at some European hubs.

For all these lanes though, Red Sea diversions are still the biggest contributor to rates that remain at least double their level a year ago. And though no military intervention has succeeded in restoring security for passing vessels yet, both Israel and the US have increased direct strikes on Houthi positions in recent days.

In air cargo, Freightos Air Index data show that transpacific and transatlantic rates have started to ease from highs earlier in the month as the end of peak season approaches, with China - Europe prices still elevated last week at almost $5.00/kg.

Some observers expect frontloading ahead of US tariffs to help keep air cargo demand and rates up into the new year. And significant tariffs on Chinese goods could also contribute to stronger overall global air cargo volumes as intra-Asia shipments of Chinese components may increase significantly.