Key insights:

  1. Ocean carriers seem to have thought twice about increasing transpacific rates that had plateaued since Chinese regulators intervened in September. Last week’s climbs were reversed to start the new year, though backhaul rates spiked by 36%.
  2. But still-strong demand and scarce containers kept pushing rates up from Asia to North Europe and the Mediterranean, as rates spiked about 30% this week on both lanes. Prices have now tripled since the end of October and are at the $7,000/FEU level, leading shippers to turn to EU regulators for relief. 
  3. With passenger travel still minimal, strong demand in December combined with limited capacity to keep air cargo rates elevated. Searches on WebCargo’s eBooking platform shows demand for air cargo out of major European lanes was down only 6% from its October peak season high.

China-US rates:

  • China-US West Coast prices (FBX01 Daily) decreased 7% to $3,890/FEU. This rate is 176% higher than the same time last year.
  • China-US East Coast prices (FBX03 Daily) dipped by 8% to $4,966/FEU, and are 87% higher than rates for this week last year.

    • Analysis

2020 ended with ocean freight rate increases on Asia-US lanes, hinting that the continued surge in demand – including added Chinese New Year (CNY) pressure – would be enough to push up transpacific rates that had plateaued following mid-September pressure from Chinese regulators.

But carriers walked back those increases to start the new year, as prices dropped to their previous plateaus. Transpacific backhaul rates for US exporters jumped 36% for the West Coast to $703/FEU, and 25% to $769/FEU from the East Coast, as carriers try and balance export demands with pressure to move empty containers.  

Meanwhile, these same market forces kept pushing rates up from Asia to North Europe and the Mediterranean where prices increased by about 30% on both lanes this week. Rates on both lanes are now at the incredible $7,000/FEU level before surcharges, having tripled since the end of October, and also triple year over year. With rates spiking and service suffering, European forwarders and shippers are urging regulators to step in. 

And with no detectable let up in demand, observers are now predicting congestion, delays, equipment shortages and high rates to possibly persist even past Chinese New Year and into Q2 of 2021.

But there may also be a couple bright spots for shippers. So far carriers have announced far fewer than normal blanked sailings around the CNY lull, which may indicate they will use that time to help relieve the empty container imbalance.

And several airlines announced the addition of new cargo capacity coming onto the market, which could ease space restrictions and high rates as capacity is still tight with passenger travel not yet recovered.  Freightos.com marketplace data shows that air cargo rates from China to major European and US destinations are still 35% higher than before the start of peak season in October, and more than 150% higher than their levels this time last year. 

Likewise, the Freightos index for air cargo demand, based on search volumes on the WebCargo eBooking platform, indicates that on most major lanes out of Europe demand remains strong, with December down only about 6% lower than it’s October peak season high.