Key insights:

Demand for ocean freight continues to outstrip supply as peak season heats up, pushing Asia-North Europe rates past the $13k/FEU mark, and sending Europe to South America rates spiking more than 30% since last week as capacity is likely being diverted to ex-Asia lanes.  Transpac capacity in particular is so constrained that most bookings – if they can be made at all – are relying on offline bidding wars that showcase the progress that remains to be made in terms of industry digitization. 

China-US rates:
Analysis

  • Asia-US West Coast prices (FBX01 Daily) dipped 9% to $5,970/FEU but remain extremely high; this rate is still 114% higher than the same time last year. 
  • Asia-US East Coast prices (FBX03 Daily) were stable at $10,319/FEU, and are 198% higher than rates for this week last year.

Demand for ocean freight, especially to the US, continues to outstrip supply, which is keeping ports congested and prices high. 

Rates from Asia to US East Coast and the Mediterranean were level – though planned mid-month GRIs and Peak Season Surcharges could continue to push prices up soon – while Asia - North Europe prices climbed 9% past the $13,000/FEU mark and rates from Europe to the East Coast of South America spiked by nearly a third to more than $3,000/FEU, likely a result of capacity being diverted to the ex-Asia lanes. 

Asia-US West Coast rates are still twice their level last July when rates had already started to climb.  And capacity on this lane in particular is so constrained and demand so strong that securing capacity at any price is a challenge, with most bookings relying on offline bidding wars and relationships. This showcases the progress that remains to be made in terms of industry digitization.

National Retail Federation data showed that June retail ocean import volumes were down 8% from the record set in May, but were still 19% higher than in June 2019. Volumes are projected to climb to an August early peak of peak season 2021, approaching May’s record - a possible indication that importers are placing orders early to avoid delays of holiday merchandise. Ocean imports are then expected to ease gradually through November, but with double-digit percent increases compared to 2019 in each of these months, this decline may not result in a significant reduction in rates or delays. 

As port congestion continues to spread, perpetuating delays, tying up capacity and helping prop up rates, the US Federal Maritime Commission – this time on the directive of President Biden – is again taking steps to scrutinize carrier behavior and how it is impacting US businesses. 

And though air cargo rates from Asia to the US and Europe remain about double typical levels on most lanes, with ocean rates spiking, a recent IATA analysis shows air cargo is “only” about six times more expensive than ocean freight, compared with a normal spread of about twelve times. Even at these rates, though, some shippers desperate for inventory are shifting from ocean to air, an indication of how strained the industry is at the moment.