Unseasonal increases in demand for ocean freight out of Asia – due to the possible start of a restocking cycle in Europe, and a pull forward of peak season demand by N. American importers out of concern over labour or Red Sea disruptions later in the year – are putting additional strain on a container market already stretched thin by Red Sea diversions.
According to a new analysis by Freightos, even with fleet growth from new vessels being applied to add more ships to rotations and accommodate longer journeys around the south of Africa, carriers are still facing a capacity shortage, and this is leading to late arrivals and port omissions as carriers skip some port calls to try and keep up with weekly schedules at major hubs.
"Delays and omissions are contributing to reports of empty container shortages and congestion due to vessel bunching at some ports in China, with congestion also a problem in Singapore and Malaysia," said Judah Levine, head of Research at Freightos.
He noted that increasing demand, tight capacity and delays are also combining to push ocean rates up from their already elevated Red Sea-adjusted floors reached in April.
The analysis noted that weekly prices rose last week and continued to climb this week, with the latest daily rates on the transpacific up to about US$4,800/FEU to the West Coast and US$5,800/FEU to the East Coast for about a 40% increase since the end of April.
The latest Asia - N. Europe rates are up about 50% since April to almost US$5,000/FEU, with prices to the Mediterranean above US$5,600/FEU and 3.5 times higher than in 2019.
"Carrier announcements of additional rate increases set for June show they do not expect demand to ease or conditions to improve in the short term," Levine said.
He noted that CMA CGM is setting Asia - N. Europe rates at US$6,000/FEU starting June 1, and Hapag-Lloyd has announced an Asia - N. America Peak Season Surcharge of US$600/FEU to start June that will climb to US$2,000/FEU mid-month.
"Increases in ocean rates and delays could push some additional demand to the air, though no significant shift seems to have started just yet," Levine added.
Freightos Air Index rates from China to North America were at US$5.86/kg last week, though prices to Europe rebounded 11% to their early-month level of about US$4.00/kg.
Prices out of S. Asia, where Red Sea-driven ocean delays have had the strongest impact on air demand and rates, were levelled at US$5.40/kg to N. America and US$3.95/kg to Europe last week, though they remained about double their levels before Red Sea diversions started.
The Freightos report noted that rates from the Middle East to N. America, which had been elevated from a shift to sea-air options, have eased by 15% in the last couple of weeks to US$2.52/kg.
In other ocean developments, Levine said two months after its collision with the Key Bridge in Baltimore, crews refloated the Dali and removed it from the crash site.
Fully restored access to the port is expected by the end of the month, with Maersk already accepting Baltimore bookings for June.
In Canada, a government review of which services must be excluded from a union strike will likely delay the planned rail worker strike for at least the next 60 days, though the sides are reportedly still no closer to a resolution.
