Current Ocean Rate Trends
Ocean freight rates out of Asia remained stable last week across most routes, holding steady at their mid-July highs for the year. However, with reports of forwarders and shippers finding it easier to secure allocations and spot bookings, and projections of a decline in US imports starting in September, there is growing anticipation that rates may begin to decrease in the coming weeks.
North America’s West Coast Rate Fluctuations
Rates from Asia to North America’s West Coast have already started to decline, dropping by 15% over the past three weeks from their recent peak. Although some carriers are planning rate increases in mid-August, many are skeptical that these hikes will hold due to easing demand and increased capacity on this route.
Early Peak Season Demand in the US
The earlier-than-usual peak in US demand is largely attributed to the frontloading of shipments, driven by concerns over a potential East Coast and Gulf port worker strike in October. The ILA union has announced that it will meet in early September to finalize contract demands, preparing its members for the possibility of a strike. Additionally, some importers expedited shipments from China to avoid tariff increases scheduled for August 1. However, the US Trade Representative has delayed the final determination on these tariffs, now expected in August, with implementation two weeks after the announcement.
Labour and Strike Developments
In other labor-related news, the review of a potential port worker strike in Vancouver and Prince Rupert is set to conclude by August 9. If approved, a strike could begin at these ports three days later, further impacting logistics.
Transatlantic Ocean Rates
Transatlantic ocean rates, which rose by approximately US$600/FEU earlier in the year due to capacity shifts from Red Sea diversions, have stabilized at around US$1,800/FEU. Despite a gradual improvement in demand during the first half of the year, sufficient capacity has kept rates from increasing. This week, rates dipped by 7%, though carriers have announced rate increases for September, with some as high as US$1,000/FEU. However, shippers remain doubtful that market conditions will support significant hikes.
Logistics Disruptions in Bangladesh
The political turmoil in Bangladesh has caused significant logistics disruptions since early June. Following the resignation of the Prime Minister on Sunday, the army has intensified efforts to restore order after violent clashes between protesters and police. A three-day suspension of commercial activities, including border and airport closures, and rail service suspensions, has halted the country’s garment manufacturing and disrupted the movement of goods.
Freightos Terminal data indicates that ocean container export rates have surged since these disruptions began. Rates to the US have increased by over 40% in the past two months, reaching around US$8,650/FEU. Rates from Chittagong to Rotterdam have spiked by nearly 170% to approximately US$7,000/FEU. Continued backlogs and delays may lead to additional storage costs for shippers and further rate increases, with some carriers already announcing mid-month price hikes.
Air Cargo Rate Movements
In the air cargo sector, Freightos Air Index rates from China to the US have decreased by 12% over the last few weeks. While this decline may reflect a seasonal summer lull in demand, rates at US$4.90/kg are still at levels typically seen only during the Q4 peak season, suggesting robust e-commerce volumes.
Rates out of the Middle East, which have been elevated since early in the year due to shifts from ocean to air logistics driven by Red Sea disruptions, have dropped by 16% to US$2.57/kg to North America and by 20% to US$1.56/kg to Europe over the past two weeks. This decline may indicate easing demand for air freight as pressure on ocean logistics begins to subside.
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Source: Container News
