Judah Levine: Current Market Summary
The Freightos Baltic Global Container Index (FBX) climbed 9% this month to a rate of $2,442/FEU, a 89% increase annually, driven by an extended peak season and a container shortage that is driving rates up on Asia-Europe and Asia-Mediterranean lanes.
Demand is still surging on China-US lanes, but rates nonetheless stayed level – likely due to pressure from Chinese regulators on carriers to keep already steep prices from climbing. As peak season normally fades in November, this year’s extended peak has China to US West Coast rates of $3,870/FEU at 191% of last year’s price, and East Coast rates at $4,900, nearly double a year ago.
The transpacific demand is leading to congestion and delays in US ports, declining reliability and to an acute shortage of empty containers in Asian origin ports and elsewhere.
Strong volumes on Asia-North Europe lanes due to holiday shipments and restocking of inventories that ran down earlier in the year put upward pressure on rates, and port disruptions are also causing problems, especially in the UK.
But as carriers are prioritizing scarce empty containers to the more lucrative transpacific lanes, the resulting equipment shortage for Asia-Europe is also contributing to the rate increase. Asia-North Europe rates hit $2,720/FEU, a 28% increase for the month and up 86% annually. And reports have carriers cancelling some capacity on Asia-Europe lanes in December as they add capacity on the transpacific.
As restocking and the shift from spending on services to goods are responsible for a significant amount of the demand on both lanes this month, most observers expect volumes, as well as the shortages, disruptions and elevated rates, to persist into the new year and possibly up to Chinese New Year in February.
But of course this year much remains uncertain, as the recent pandemic surge may impact consumer spending, and the expected distribution of vaccines could impact trade as well.
About Judah Levine, Research Lead, Freightos
Judah is an experienced market research manager, using data-driven analytics to deliver market-based insights. Judah produces the Freightos Group's FBX Weekly Freight Update and other research on what's happening in the industry from shipper behaviors to the latest in logistics technology and digitization.