MORE RATE INCREASES EXPECTED SOON, THOUGH SIGNS CONGESTION IS EASING

Ocean rates are expected to climb further, but congestion is showing signs of easing.

 

Ex-Asia ocean rates were stable last week, but prices already at year-highs are expected to climb further as we enter the typical peak season months.

 

Congestion — though less severe than in recent weeks — remains an issue at some major hubs, according to a new Freightos report, with several carriers announcing significant July peak season surcharge increases or GRIs. 

 

Increased focus on rail

 

"Scarce container space from China to India has some importers there turning to bulk or multi-purpose options. Delays are also pushing more European importers to rail alternatives, though congestion is growing for this mode as well," said Judah Levine, head of research at Freightos.

 

He added that high demand and rates are also pushing more carriers to launch or add long-haul services.

 

"If the early start to peak season in May proves enough to mean an early end as well, then we might expect congestion and rate levels to reach their highest in July and August, allowing some respite by October until pressure resumes in the lead-up to Lunar New Year," Levine further said.

 

"If Red Sea diversions are still in place, pre-LNY pressure could resemble the levels we're seeing now and could start earlier than usual," he added.

 

Meanwhile, Freightos noted that one driver of the early start to the transpacific peak season was concern over a possible East Coast and Gulf port worker strike in October.

 

"With the sides still far apart, trade groups are urging the White House to get involved. With capacity already stretched thin by longer routes around Africa, additional delays and backlogs from an ILA strike, or, to a lesser extent, the looming Canadian rail strike possibly in July, would also put more or renewed pressure on ocean rates," Levine further said.

 

Meanwhile, the report noted that in the welcome news department, with the rainy season pushing reservoir levels back to normal, the Panama Canal Authority announced that it would ease draft restrictions and restore daily transits to 35 — about the pre-drought norm — by August.

 

Air cargo rates remain elevated

 

Freightos said that despite growing opposition from domestic groups to Chinese B2C e-commerce imports entering the US and EU via de minimis exemptions and mostly by plane, air cargo rates and volumes have remained elevated. Freightos Air Index China—North America rates ticked up 10% last week to US$6.00/kg, with some carriers adding transpacific capacity to meet growing demand.

 

It added that Amazon, in response to this new, low-priced competition, reportedly will open its platform to Chinese sellers.