Ocean rates were on an uptrend last week, and vessels reported full prompting containers to get rolled to later sailings, which could be an indication of a peak season increase in demand, according to the latest analysis by Freightos.
The digital marketplace for international air and ocean shipping said Transpacific ocean rates trended up last week, and daily rates so far this week have climbed another US$200/FEU on both lanes, pushing Asia-US West Coast rates to more than US$1,500/FEU — 3% above 2019 levels — and East Coast prices to about US$2,600/FEU.
"These rate increases come alongside reports of full vessels and even containers getting rolled to later sailings. Taken together, these developments likely reflect the beginning of a peak season increase in demand," Freightos said.
"But, while blanked sailings usually decrease during peak season, reports of increases in capacity reductions suggest that carriers are nonetheless facing an oversupplied market and need to reduce capacity in order to realize volume increases in the form of higher spot rates," the report added.
It further noted that this challenge is "only getting bigger" as the delivery of new vessels will push transpacific capacity up 19% higher than last year by the end of August.
"If we are seeing the start of peak season, projections still vary on how long it will last, with some expecting normal seasonality with elevated volumes through October and others predicting an early decline by September," the report added.
Air cargo Q2 performance below 2019 levels
Freightos noted that other factors are also expected to impact volumes, rates and capacity — such as the announcement of the Panama Canal Authority to reduce daily transits starting in August due to persistent low-water levels.
"[This] could also put some upward pressure on East Coast rates," Freightos said.
The report added that in Asia - North Europe trade, carriers had faced lagging volumes and increases in capacity from new ultra-large vessels but have kept rates at about US$1,300/FEU — on par with 2019 levels — since early June through blanked sailings and slow steaming without cancelling as many sailings as they did last year.
Despite these market conditions, Freightos said several carriers had announced August 1st General Rate Increases that would push rates up to about US$1,900/FEU.
"In air cargo, major US carriers reported this week that Q2 cargo performance was below 2019 levels as demand is in a lull alongside capacity climbing on recovering passenger travel," the report said.
It said that based on the Freightos Air Index, rates were at US$4.29/kg for the transpacific last week and US$1.80/kg on the transatlantic, both about 40% lower than a year ago.
Updates on labour disputes in logistics
Meanwhile, Freightos gave an update on several labour disputes in North America impacting logistics and supply chains.
It said that ILWU Canada negotiators accepted a mediated proposal and ended its two-week strike on July 13, only to have its caucus reject the agreement and restart a strike before reconsidering and ending the strike again a week ago. Union leaders are now presenting the terms to its members, with a vote on ratification expected later this week.
Teamsters at UPS — who had authorized an August 1st strike — accepted a tentative agreement, with ratification expected over the next few weeks. And Teamsters at LTL carrier Yellow called off a strike planned to begin yesterday as negotiations continue.
Based on Freightos Baltex Index, ocean rates for Asia-US West Coast increased 2% to US$1,366/FEU.
Asia-US East Coast prices climbed 6% to US$2,519/FEU while Asia-North Europe prices were level at US$1,285/FEU last week.
Asia-Mediterranean prices fell 2% to US$1,956/FEU, according to Freightos.
For air cargo rates — based on Freightos Air Index — China-North America prices rose 1% to US$4.29/kg, while China-North Europe was also up 3% to US$3.12/kg.
North Europe-North America, on the other hand, fell 1% to US$1.80/kg.