[Freightos Weekly Update]: Some retailers skeptical of H2 rebound, as transpac nears $1k

Key insights:

1. Current Asia - US West Coast prices of just over $1,000/FEU are the lowest recorded since the FBX launched in 2016. Asia - N. Europe prices are now just above 2019 levels.

2. High profile importers like Nike are still struggling with excess inventories, and are still reducing new order volumes, which could push off a hoped-for rebound in ocean freight in time for peak season.

3. Transatlantic rates are still double 2019 levels, though they have fallen steadily since September and are 50% lower than a year ago as demand has eased and carriers have added capacity.

4. Labor strikes in Germany significantly disrupted operations early this week, while US shipper groups are calling for the White House to intervene in stalled West Coast port labor negotiations.

Ocean rates:

• Asia-US West Coast prices (FBX01 Weekly) dipped 1% to $1,016/FEU. This rate is 94% lower than the same time last year.

• Asia-US East Coast prices (FBX03 Weekly) fell 3% to $2,123/FEU, and are 88% lower than rates for this week last year.

• Asia-N. Europe prices (FBX11 Weekly) decreased 6% to $1,335/FEU, and are 89% lower than rates for this week last year.

Analysis

Hopes for a rebound in ocean demand in time for peak season may have dampened a bit this week as major retailers like Nike and Adidas reported that they are still coping with inventory surpluses built up over H1 of last year, with other importers taking drastic inventory-reduction measures in response. The longer inventories remain high, the longer new orders, ocean volumes and freight rates will remain deflated.

Transpacific ocean rates dipped slightly last week. West Coast prices of just over $1,000/FEU are the lowest rates recorded since the FBX launched in 2016. These prices are 21% lower than in 2019 and rates to the East Coast are 14% lower than 2019 levels. Asia - N. Europe rates fell 6% to $1,335/FEU, just 4% higher than in 2019, though reports that some ships are sailing at capacity may indicate that carriers are close to aligning supply with demand levels, which could stabilize rates.

Transatlantic prices of $3,893/FEU are more than double 2019 levels, though rates fell 7% last week, and are 21% lower than a month ago. Prices have fallen about 50% since a year ago, and have decreased fairly steadily since the fall as carriers have added capacity to this still-lucrative lane and as volumes have declined – though they remain well above 2019 levels.

In labor developments, widespread logistics worker strikes in Germany disrupted operations early this week, while in the US shipper groups are calling for the White House to intervene in stalled West Coast port labor negotiations.

Freightos Air Index data show ex-Asia air cargo rates to Europe and the US are more than 20% lower than a month ago as weak demand persists. Prices to the US of $3.28/kg are more than 70% lower than a year ago, and, at $3.53/kg, rates to Europe are 46% lower than this time last year.