This week's key insights from the Freightos weekly update:

1. The latest NRF data show US ocean imports fell more than 8% in September, with October volumes expected to be 10% lower than last year.

2. The drop in demand has driven the even sharper drop in ocean rates with Asia – US West Coast rates down by more than 80% since the end of April, and East Coast prices down almost two-thirds. West Coast rates rebounded slightly this week, possibly a result of carriers removing capacity, though the cancellations have not been widespread.

3. But consumer spending, ocean volumes and rates all remain above 2019 levels suggesting that demand is cooling from its overheated run, but remains relatively strong even if demand levels will be experienced unevenly by different types of businesses/goods as consumer habits shift and we move into the holiday season.

4. Freightos Air Index data shows that, like in ocean freight, air cargo rates are much lower than a year ago. China - N. Europe rates were at $4.93/kg this week, 37% lower than last year and transpacific prices of $6.16/kg were down nearly 50%, leaving many in the industry pessimistic that much of a peak season will materialize in air cargo this year either.

Asia-US rates:

• Asia-US West Coast prices (FBX01 Daily) increased 9% to $2,730/FEU. This rate is 84% lower than the same time last year.

• Asia-US East Coast prices (FBX03 Daily) fell 9% to $6,026/FEU, and are 71% lower than rates for this week last year.

Analysis

The latest National Retail Federation container volume data show that US demand for ocean freight imports fell by more than 8% in September compared to August, and projects October volumes about 10% lower than last year as well as gradually declining volumes to close the year.

This decrease in volumes as well as easing congestion at US West Coast ports has pushed Asia – US West Coast rates down by more than 80% since the end of April, while East Coast prices have fallen by almost two-thirds. West Coast rates rebounded slightly this week, possibly a result of carriers removing capacity, though the canceled sailings have not been widespread yet. Some observers are now suggesting spot rates could recede to 2019 levels by the end of the year.

Ocean volumes are falling as inflation curbs some consumer demand and some spending shifts to services or other types of goods, but also because a significant share of peak season demand was pulled forward to earlier in the year to avoid delays experienced last peak season. These trends combined to leave some major retailers holding too much inventory for certain types of goods.

But consumer spending – along with ocean rates – remains above 2019 levels. And even with the expected decrease in ocean imports, monthly volumes for Q4 would still be 6-20% higher than in 2019, suggesting that demand is cooling from the overheated state of the last 18 months, and for certain types of goods more than others, but remains relatively strong if experienced unevenly by different types of businesses as we move into the holiday season.

Freightos Air Index data shows that, like in ocean freight, air cargo rates are much lower than a year ago. China - N. Europe rates were at $4.93/kg this week, 37% lower than last year and transpacific prices of $6.16/kg were down nearly 50%, leaving many in the industry pessimistic that much of a peak season will materialize in air cargo this year either.