Key insights:

1. The continued peak in ocean container demand is keeping ports congested, equipment scarce and pushing rates to multi-year highs on all the major lanes out of Asia, as the Asia-Europe (+77% since October, +141% y-o-y), and Asia-Mediterranean (+60% since Oct., +130% y-o-y) lanes have now joined Asia-US lanes at about $4,000/FEU or above.

2. Air cargo may have passed it’s peak season peak, but Freightos.com data showed rates from China to the US and EU began climbing (6-12%) this week, possibly due to vaccine-related cargo starting to grab still-limited capacity.   

China-US rates:

• China-US West Coast prices (FBX01 Daily) went unchanged at $3,878/FEU. This rate is 159% higher than the same time last year.

• China-US East Coast prices (FBX03 Daily) were also stable at $4,928/FEU, and are 82% higher than rates for this week last year.

Analysis

The sustained peak in ocean container shipping continued impacting the industry this week in the form of port congestion, scarce empty containers and sky high rates now on all major lanes out of Asia.

In addition to the Asia-US lanes that have had extremely elevated rates since September, lanes from Asia to North Europe and to the Mediterranean have now joined Asia-US West Coast rates at about the $4,000/FEU mark, with Asia-North Europe climbing 77% since the end of October, up 141% compared to last year, and Asia-Mediterranean hitting $4,001/FEU this week, up 60% over the same period and 130% higher year on year. The last time that market conditions grouped these three lanes along the same price point was in November 2019, but at a rate of about $1,500/FEU, 37% of current prices.

The demand for ocean freight is so strong and the equipment shortage so widespread, that rates are being pushed up even with nearly all available capacity in the water, and carriers and even forwarders looking for ways to add more.

Delays at some ports in Europe are so bad that CMA CGM announced it would not take any new Asia-North Europe bookings in December, and other carriers are skipping congested ports in the UK. And the backlog at LA-Long Beach is still keeping more than twenty ships at a time waiting to dock.  

In air cargo, indications are that the peak of peak season may be behind us, as rates had levelled off in the last few weeks, and with search volumes on WebCargo’s air forwarding platforms dropping to the lowest volumes since mid-September. However, Freightos.com marketplace rates indicate an increase of 7-12% in rates out of Asia to US and Europe destinations this week, possibly a sign of vaccine-related cargo starting to take up capacity.  

Some observers, though, do not anticipate the vaccine distribution to cause the same sort of strain on capacity that the spring’s PPE rush did, as manufacturing is spread out geographically and distribution will be spread over a longer time period.