Asia - US West Coast rates ticked down 5% last week despite ongoing capacity reductions, suggesting a weakening of volumes at a time of year — the last few weeks before China's Golden Week holiday — that typically sees some increase in demand from volumes pulled forward to avoid the manufacturing and logistics slowdown in China over the early-October break, according to a new analysis by Freightos.
"Weakening demand would support the observation that this year’s short and relatively modest peak is behind us," said Judah Levine, head of research at the international freight marketplace.
In its report, Freightos noted that analysis suggests that carriers are also partially keeping rates up — and above 2019 levels — through an increase in rejections despite reports that vessels are sailing at only 80% of capacity.
Next rebound: Lunar New Year
It added that the no-show of proposed September GRIs or Peak Season Surcharges so far are additional signs that "volumes are declining" and that carriers may be looking toward the Lunar New Year in February for the next rebound.
"Carriers are increasing ex-China blanked sailings over the Golden Week lull, which is typical, but some carriers announced additional Asia-Europe blanking for early September as well, implying that no pre-holiday bump in demand has materialized on this lane either," Levine said.
The analysis pointed out that though Asia-North Europe rates were stable last week, daily rates this week have declined about 7%.
On the labour front, the US West Coast's ILWU members officially ratified their new six-year contract last week, ending the dispute that started last July, though some of the volumes that shifted to the East Coast and Gulf ports as a result of the conflict may not be coming back.
At the same time, the East Coast and Gulf port worker union, the ILA, is a year away from the end of its contract with port operators and will begin negotiations soon.
"In air cargo, the seasonal lull combined with overall low demand is pushing volumes below pre-pandemic levels at some of Europe's major hubs, though some in the industry are hopeful that electronics product launches set to begin set to begin soon could drive some peak season rebound in the coming months nonetheless," Levine said.
The analysis cited Freightos Air Index data showing ex-Asia and transatlantic rates remain more than 40% lower than a year ago, though China - North America rates have increased more than 25% since a month ago.
Ocean rates based on the Freightos Baltic Index showed that Asia-US West Coast prices (FBX01 Weekly) decreased 5% to US$1,927/FEU; Asia-US East Coast prices (FBX03 Weekly) were level at US$3,079/FEU; and Asia-N. Europe prices (FBX11 Weekly) were level at US$1,744/FEU.
Asia-Mediterranean prices (FBX13 Weekly) also increased by 1% to US$2,338/FEU.
Air rates, based on the Freightos Air Index, showed China - North America weekly prices increased 14% to US$4.59/kg; China - N. Europe weekly prices increased 5% to US$3.05/kg; and N. Europe - N. America weekly prices increased 2% to US$1.70/kg.