[Freightos Weekly Update] Ocean rate slide eases despite more signs of slowing demand

Key insights:

1 Despite more signs of slowing demand, ocean rate slides have slowed and prices remain well above pre-pandemic levels.

2 Carrier projections of still-elevated volumes and persistent congestion at major ports globally are expected to keep rates well above normal through the typical peak season and likely well beyond.

3 The rebound in transatlantic passenger air travel added capacity and pushed air cargo rates down 11% in July to $3.40/kg, though capacity will likely decrease after the end of the summer tourist season.

Asia-US rates:

• Asia-US West Coast prices (FBX01 Daily) increased 2% to $6,692/FEU. This rate is 65% lower than the same time last year.

• Asia-US East Coast prices (FBX03 Daily) fell 3% to $9,978/FEU, and are 52% lower than rates for this week last year.

Analysis

Chinese manufacturing unexpectedly contracted in July, and consumer spending in the US has slowed for certain types of goods as inflation continues to climb. Best Buy was the latest major retailer to project a decrease in revenue, though sales remain above pre-pandemic levels.

Despite these signs of a slowdown, some ocean carriers still anticipate strong transpacific volumes for the coming months. Even with some decline in demand, new COVID disruptions in Asia, labor tensions, and persistent congestion at European and North American ports will likely keep container rates elevated on all major trade lanes.

Asia - US West Coast rates fell by about $6,000/FEU and more than 50% from the end of April through June, but have decreased “only” about 14% or $1,000 since, to $6,519/FEU this week – nearly five times higher than the level in August 2019. Congestion and blanked sailings on the Asia - N. Europe lane have kept prices about level – and almost 8X the August 2019 rate – since early May despite decreasing volumes.

Freightos Air Index China - N. Europe rates fell 2% in July to $4.51/kg, and, though well above pre-pandemic levels, are more than 30% lower than a year ago. The rebound in transatlantic passenger air travel added capacity and pushed rates down 11% in July to $3.40/kg, though capacity will likely decrease after the end of the summer tourist season.