- Increased U.S. ocean import projections for Q4 reflect importers’ attempts to frontload shipments ahead of potential East Coast port strikes and tariff hikes.
- Transpacific ocean rates have stabilized around $5,000 per FEU, while Canada faces significant port disruptions impacting North American trade.
- Asia-Europe rates are rising due to demand rebound, congestion, and Lunar New Year preparations.
- Air cargo peak season has been less intense than expected, potentially due to preemptive frontloading by importers.
According to the American Journal of Transportation, the U.S. freight market is adjusting to various pressures in Q4, including increased import projections by the National Retail Federation (NRF), expected labor disruptions, and tariff adjustments. Shippers and importers are frontloading shipments, affecting ocean rates and congestion across North American ports.
Rising U.S. Ocean Import Projections and Frontloading Trends
The National Retail Federation has revised its Q4 ocean import projections upward, attributing the increase to importers frontloading shipments ahead of potential disruptions in January. The looming possibility of an East Coast port strike and anticipated tariff hikes in 2024 has spurred a surge in shipment volumes. This volume strength has helped stabilize transpacific ocean rates around $5,000 per FEU, a figure well above the year’s low of $3,000-$4,000 per FEU. Additionally, with the Lunar New Year in late January, rates may see further pressure in late December as businesses rush to secure inventory.
Labor Disruptions at Canadian Ports and their Impact on North American Trade
Labor disputes have escalated in Canadian ports, with operators locking out union workers at the Ports of Montreal, Vancouver, and Prince Rupert. These lockouts have halted container operations, resulting in severe congestion and backlogs. Government-mediated negotiations have so far been unsuccessful in British Columbia, potentially leading to diversions to nearby U.S. ports such as Seattle-Tacoma. This could create further delays and congestion as importers and exporters seek alternative routing options, highlighting the wider repercussions of labor disputes in North American supply chains.
Stabilization of Transpacific and Transatlantic Ocean Freight Rates
Despite a sharp decline in early October, transpacific ocean rates have stabilized around $5,000 per FEU due to sustained volume strength and pre-Lunar New Year demand. Although frontloading has not been as evident on the transatlantic route, rates have remained elevated at approximately $2,600 per FEU due to capacity adjustments by carriers. In Asia-Europe routes, rates surged by about 20% to $4,500 per FEU, driven by renewed demand, European port congestion, and blank sailings. Maersk reports that demand rebound and operational delays have supported these rate increases, with expectations for further demand growth in early 2024.
Air Cargo Peak Season Trends and the Impact of E-Commerce Volumes
The peak season for air cargo, typically observed in November, has shown less intensity than anticipated this year. Although air freight rates remain elevated, massive e-commerce volumes have kept demand steady throughout the year, reducing the impact of traditional peak season spikes. Some forwarders speculate that importers have frontloaded cargo to avoid the anticipated peak season chaos, resulting in a less volatile Q4 for air cargo. Weekly rates from China to North America and Europe have declined, while rates from Northern Europe to North America have seen a slight increase.
Freight Rate Data: Ocean and Air Market Metrics
The Freightos Baltic Index (FBX) and Freightos Air Index offer insight into the fluctuating rates in both ocean and air markets:
Freightos Baltic Index: Ocean Rates
- Asia-U.S. West Coast: $5,208/FEU (4% decrease)
- Asia-U.S. East Coast: $5,468/FEU (5% increase)
- Asia-N. Europe: $4,495/FEU (23% increase)
- Asia-Mediterranean: $4,301/FEU (23% increase)
Freightos Air Index: Air Rates
- China-N. America: $5.48/kg (18% decrease)
- China-N. Europe: $3.84/kg (3% decrease)
- N. Europe-N. America: $2.39/kg (7% increase)
Conclusion
The U.S. freight market is navigating complex challenges in Q4, including increased import volumes, stable transpacific rates, and labor disruptions in Canada that threaten North American trade flows. Asia-Europe routes are witnessing a demand-driven rate increase, while air cargo rates have remained steady despite e-commerce-driven capacity constraints. As the Lunar New Year approaches, these factors collectively underscore a dynamic and uncertain landscape for the freight industry in the coming months.
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Source: American Journal of Transportation
