All About Freight & Shipping: Costs, Issues And Shortages

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Freight & shipping costs & delays

The pandemic’s extremely high logistics costs have been one factor in inflation.

However, since the spring of 2022, maritime freight rates have decreased, with rates between China and the US’s West Coast recently reaching pre-pandemic levels.

Through November 2022, the number of imported containers entering the US decreased. Congestion also decreased dramatically, particularly at LA/Long Beach, where it was back to normal by the end of the month.

According to Freightos data, charges to ship a 40-ft container from Asia to the US West Coast have decreased by more than 80% since the end of April 2022, while costs to the US East Coast have decreased by nearly two-thirds. A significant factor in declining logistics costs is a decline in consumer expenditure, which over the previous two years had raised sales for many importers.

Ocean freight market update & forecast for 2023

Freightos data shows that rates between Asia and North America have decreased by 40% since the end of February and are now equal to 2019 levels, indicating that carriers are choosing to engage in a price war on both this and the transpacific lanes.

  • Asia- N. America West Coast rates fell 8% to $1,071/FEU this month, 93% lower since a year ago, and essentially on par with its November 2019 level of $1,321/FEU.
  • Asia – N. America East Coast rates fell 10% to $2,344/FEU, and are 87% lower than last year.
  • Asia – Europe rates continued to decrease along with falling volumes as well, as prices fell 17% to $2,344/FEU, 87% lower than last year.

Transpacific rates also dropped, with West Coast costs below $1,100/FEU – 30% less than in March 2019 and actually lower than at any other time in 2019.

According to the Freightos Baltic Index, these are the container freight rates for the second week of March 2023:

The average pricing for Asia-Europe containers dropped by 17% last week compared to the week before, while the most recent daily rates show prices are at about $1,500/FEU, down by 40% since the end of February and almost on pace with March 2019 values. This sharp decline shows that Asia-Europe ocean traffic has entered a pricing war as demand continues to decline and carriers continue to operate some spare capacity.

Prices between Asia and the Mediterranean are around $2,755/FEU, down 30% since February but 30% higher than in 2019.

Negotiations have started on other West Coast labour issues in both the US and Canada, according to a recent joint statement from West Coast port owners and the ILWU. Both the ports and the union are hopeful that an agreement can be reached shortly.

The question is whether the substantial shipping discount to the West Coast in comparison to East Coast rates will be sufficient to persuade some importers to shift their volumes back to the west prior to the signing of a new labour agreement. These importers had previously moved their volumes to East Coast destinations to avoid potential labour disruptions.

As demand for air cargo continues to decline, some ocean carriers who expanded into the air cargo market using record earnings are now scaling back their air capacity as well. Notwithstanding the fact that this year’s volumes are significantly lower than in 2018, some airlines are yet confident that this year’s revenue will be higher than in 2019.


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Source: Freightos 


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