[Freightos Weekly Update] Transpac rates to both coasts at about 2019 levels to close the year

Key insights:

1. Transpacific ocean rates to the West Coast have stabilized at 2019 levels for about a month now, and prices to the East Coast are just 12% higher than in December 2019 as demand and congestion ease.

2. Asia - Europe rates have fallen 50% in the last six weeks, but remain 30% higher than in 2019 as blanked sailings increase, and congestion and some recent labor disruptions may be slowing operations.

3. Carriers are expected to blank about half of all scheduled ex-Asia sailings for the months after Lunar New Year, while some Asian manufacturers will take the unusual step of shutting down for the holiday as early as the second week of January – another indication of sagging demand.

Ocean rates:

• Asia-US West Coast prices (FBX01 Weekly) dipped 3% to $1,377/FEU. This rate is 91% lower than the same time last year.

• Asia-US East Coast prices (FBX03 Weekly) fell 10% to $2,924/FEU, and are 82% lower than rates for this week last year.

• Asia-N. Europe prices (FBX11 Weekly) increased 11% to $2,405/FEU, and are 83% lower than rates for this week last year.

Analysis

Slowing volumes have led Asia - US West Coast rates to stabilize at 2019 levels for about a month now. Prices to the East Coast have continued to fall on easing demand and congestion – 10% since last week – and though the rate of the decline has slowed in December, the current price is just 12% above 2019 levels.

Asia - N. Europe rates have fallen 50% since mid-November, though blank sailings, some persisting congestion, and renewed labor disruptions in some ports may be combining to keep prices 30% higher than in December 2019.

Transatlantic prices of more than $5,600/FEU remain almost three times higher than in 2019, though they have declined 30% from their May-to-September $8,000/FEU peak as carriers add capacity to this still-lucrative lane and congestion eases.

Carriers are expected to blank about 50% of all scheduled sailings from Asia to the US and Europe after the Lunar New Year (LNY) holiday – which runs from late January to early February – suggesting they anticipate the slowdown to continue through the typical post-LNY lull months until inventories run down and demand picks up some time in Q2 at the earliest, or possibly not until next year’s peak season.

Another sign of sagging demand is the unusual move among some Asian manufacturers to close for the holiday as early as the second week of January. Easing Covid restrictions in China are also contributing to more workers out sick, while other protocols will reduce barge and trucking capacity earlier in the month too, which may also be driving the earlier start to the holiday.