Key insights:

1 Transpacific ocean rates were unchanged to both coasts this week. This slowing of the rate slide compared to recent trends could be an early sign that the recent increase in canceled sailings by carriers is starting to have an impact on rates.

2 At the same time, carriers are increasing reductions to Europe too, and rates dropped 8% on the Asia - N. Europe lane this week nonetheless.

3 Freightos Air Index data show rates from China to both Europe and the US are level at a time they were climbing last year, and are also significantly lower – 25% and 48% respectively – than a year ago.

4 Air cargo peak season typically starts in early November, but flat rates contribute to the skepticism that there will be a peak season surge this year. Falling demand could also combine with increases in capacity from recovering passenger travel to push rates down further.

Asia-US rates:

• Asia-US West Coast prices (FBX01 Daily) were stable at $2,494/FEU. This rate is 85% lower than the same time last year.

• Asia-US East Coast prices (FBX03 Daily) were also unchanged at $5,713/FEU, and are 71% lower than rates for this week last year.

Analysis

The transpacific ocean rate slide slowed this week as prices to each coast stayed level. Carriers have increased the number of canceled transpacific sailings for the coming weeks as demand decreases. The slowdown in rate decreases could be an early sign that the so-far ineffective reduction in capacity is starting to have an impact.

Carriers are increasing the number of blanked sailings from Asia to Europe as well, though rates fell an additional 8% on this lane this week nonetheless as volumes continue to decline.

Another indication of falling demand for ocean freight is the recent increase in the size of the inactive container ship fleet, which measures the number of vessels currently not in use – not including blanked sailings.

Ocean carrier Hapag-Lloyd’s CEO speculated this week that market forces could push ocean rates below 2019 levels in the near term. Nonetheless, he believes that demand trends and per-unit costs that are higher than in 2019 will ultimately drive rates to settle above pre-pandemic levels.

Freightos Air Index data show air cargo rates from China to both Europe and the US are level at a time they were climbing last year, and are also significantly lower than a year ago. China - US rates of $5.50/kg are 48% lower than last year, while China - N. Europe prices of $5.15/kg are 25% lower than last October.

Air cargo peak season typically starts in early November, but flat rates contribute to the skepticism that there will be a peak season surge this year. Falling demand could also combine with increases in capacity from recovering passenger travel to push rates down further.