Tuesday, October 19, 2021
HomeBreaking NewsFreight rate index now 430% higher than last year

Freight rate index now 430% higher than last year

  • The Freightos Baltic Index (FBX) ended August at US$10,321 per FEU, only a 1% increase from July but 430% higher year-over-year
  • Asia-US West Coast rates were unchanged compared to the end of July at $18,425 per FEU, still a 452% increase compared to a year ago
  • Asia-US East Coast rates climbed just 1% to $20,057 per FEU against July, but are 415% higher than last year

The Freightos Baltic Index (FBX) ended August at US$10,321 per forty-foot equivalent unit (FEU), only a 1% increase from the previous month but 430% higher year-on-year and nearly eight times the pre-pandemic norm, according to the latest Baltic Exchange monthly market summary.

Ocean freight rates were extremely high though mostly level in August amid more disruptions experienced in container shipping due to COVID outbreaks and a possible early peak season, said the report.

FBX is the international freight rate index that provides market rates for FEUs and is a joint undertaking of Freightos and the Baltic Exchange.

A port worker in Ningbo, China testing positive for COVID-19 set off fears of a repeat of the outbreak. But unlike the Yantian incident which caused significant regional delays and put pressure on rates, the slowdown at Ningbo, which also created a backlog and sent ships to alternate regional ports, was not as severe as expected, said Judah Levine, research lead at Freightos, which operates a digital booking platform for international shipping.

Ningbo’s relatively mild impact brought some good news to an already overloaded ocean freight ecosystem. Many US importers with low inventories and concerns about getting holiday season orders on time are shipping at peak season volumes earlier than usual. Congestion at the ports of LA and Long Beach has never completely subsided this year. But this latest push has led to a new surge of arriving ships and a record number of vessels waiting for days off the coast.

Although volumes and delays may have increased last August, trans-Pacific container rates stayed level, albeit still extremely high, said Levine.

For the month, Asia-US West Coast rates were unchanged compared to the end of July at $18,425 per FEU, still a 452% increase compared to a year ago, and 325% higher than at the start of the year.

Asia-US East Coast rates climbed just 1% to $20,057 per FEU, 415% higher than last year.

Congestion at key European ports likewise caused delays and kept precious capacity waiting at ports. However, Asia-North Europe prices increased only 1% to $13,858 per FEU, more than eight times a year ago. Asia-Mediterranean rates climbed 8% to a new high of $12,906 per FEU, 596% higher than last August.

Levine said that given the lack of significant price volatility in August despite the extreme demand, capacity shortage and other disruptions, it would be tempting to suggest that container rates may have reached their ceiling at the end of July. But he cautioned that in such unprecedented times, and with rates climbing for more than a year, it may not be wise to subscribe to that view.

Photo by CHUTTERSNAP on Unsplash

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