[Freightos Weekly Update] Transpac rates stable as transit times continue to improve

1. Transpacific ocean rates have been stable for more than a month, falling below 2019 levels in the last couple weeks with the absence of the typical mini-demand surge ahead of Lunar New Year.

2. Despite falling demand and an 80% drop compared to a year ago, Asia to N. Europe rates remain above 2019 levels.

3. As congestion eases Freightos.com China - US ocean transit time data show average duration in December was 35% lower than a year ago, though some lingering East Coast and Gulf congestion is keeping transit times 20% higher than in 2019.

4. Freightos Air Index rates ex-China to N. America and Europe are more than 30% lower than a year ago when demand was surging. Despite these price declines, fuel and labor costs are keeping air cargo rates more than double 2019 levels.

Ocean rates:

• Asia-US West Coast prices (FBX01 Weekly) fell 3% to $1,361/FEU. This rate is 91% lower than the same time last year.

• Asia-US East Coast prices (FBX03 Weekly) dipped 2% to $2,812/FEU, and are 83% lower than rates for this week last year.

• Asia-N. Europe prices (FBX11 Weekly) increased 10% to $2,978/FEU, and are 79% lower than rates for this week last year.

Analysis

Transpacific ocean rates to the West Coast have been stable for about six straight weeks, falling below 2019 levels in the last couple weeks with the absence of the typical mini-demand surge ahead of Lunar New Year. Prices to the East Coast have likewise gone mostly unchanged for about a month, and are 83% lower than a year ago. Prices ticked up last week from Asia to N. Europe though they likewise are nearly 80% lower than a year ago.

Reports of significant blanked sailings alongside some uptick in demand from Asia to the Mediterranean may help explain more resilient rates on this lane. Through last week prices have remained at about the $4,000/FEU level since early December – more than double the pre-pandemic norm – though daily rates for this week indicate that prices may be starting to ease here as well.

Falling demand and easing congestion are resulting not only in a shift of capacity – borrowed from regional and more minor trade lanes as demand surged ex-Asia – back to intra-regional service, but in falling transit times as well.

Freightos.com marketplace transit time data for China - US ocean shipments show that average shipment duration declined 5% in December from November, and 35% from a year ago, though some lingering East Coast and Gulf congestion is keeping transit times 20% higher than in 2019.

Freightos Air Index rates ex-China to N. America and Europe have been mostly stable in the last few weeks. But at $5.91/kg and $4.92/kg respectively, prices are more than 30% lower than a year ago when demand was surging including from some ocean to air conversions as ocean delays spiked. Despite these price declines, fuel and labor costs are keeping air cargo rates more than double 2019 levels.