[Freightos Weekly Update] No LNY impact on ocean prices this year, while COVID outbreak pushes Frankfurt air rates up

Key insights:

1. The typical pre-Lunar New Year increase in ex-China ocean rates didn’t materialize this year. Many importers may have opted to hold off until after LNY, hoping that prices will ease after the holiday. Congestion and delays at European and US ports may have also discouraged shippers from rushing out orders that will likely sit for days at sea anyway.
2. A COVID outbreak among Lufthansa Cargo’s staff in Frankfurt slowed operations there through the start of this week. The Freightos Air Index (FAX) showed that air cargo rates from Frankfurt to South East Asia increased more than 20% compared to the week before, to $2.77/kg, while LAX-FRA rates climbed 16% last week. 

Asia-US rates:

• Asia-US West Coast prices (FBX01 Daily) dipped 2% to $15,218/FEU. This rate is 169% higher than the same time last year.
• Asia-US East Coast prices (FBX03 Daily) fell 1% to $16,659/FEU, and are 192% higher than rates for this week last year.

Analysis

Ex-China container rates typically rise in the weeks ahead of Lunar New Year (LNY) as shippers rush to get orders out before manufacturing slows over the holiday period. But this year, spot prices from Asia to the US and Europe barely moved, and started to trend down slightly this week as the holiday began. 

Rates were already 10X their pre-pandemic norm, so many importers may have opted to hold off until after LNY, hoping that prices will ease after the holiday. The persistent congestion and delays at European and US ports may have also discouraged shippers from rushing out orders that will likely sit for days at sea anyway, suppressing some of the typical pre-LNY demand.   

The ports of LA/Long Beach continue to look for new strategies to clear their clogged container yards and help speed operations. This week they announced that ocean carriers have agreed to carry any available empty container – even from competing lines – back to Asia, reducing some of the complexity that can slow things down. Authorities also shared a new plan to incentivize overnight trucking operations. 

In air cargo, an omicron outbreak among Lufthansa Cargo’s airport staff in Frankfurt led the airline to stop accepting bookings through its hub last Wednesday. The labor shortage significantly slowed handling through the start of this week, though operations have begun to recover. 

As availability dipped last week, the Freightos Air Index (FAX) showed that air cargo rates in and out of Frankfurt climbed. Prices from Frankfurt to South East Asia increased more than 20% compared to the week before, to $2.77/kg, while LAX-FRA rates climbed 16% to $3.06/kg.