Ocean freight rates from Asia to Europe drop 30% amid early peak season

At the close of October, ocean freight rates from Asia to Europe experienced a 30% decrease from the end of September, influenced by Red Sea diversions that initiated an early peak season. Consequently, the post-peak/pre-Lunar New Year demand downturn commenced sooner. Rates have stabilized at US$3,500/FEU for both Europe and the Mediterranean, mirroring the lows seen during the previous demand slump in March and April, despite being approximately twice the long-term averages due to continued sailings around the Cape of Good Hope.

Carriers are adjusting to the subdued demand with blanked sailings announced for November. However, the typical Lunar New Year surge in volume and rates might occur earlier, as the holiday begins in late January, prompting shippers to potentially increase orders sooner to mitigate longer sailing durations.

The aftermath of a three-day port worker strike on the US East Coast and Gulf ports has seen congestion ease, with minimal impact on transpacific rates. Conversely, West Coast rates dropped 19% in October to US$5,540/FEU, reflecting a 32% decrease from their July high. East Coast rates have seen a more pronounced reduction, falling 41% to US$5,165/FEU, attributed to a pre-strike volume frontloading in September.

Transatlantic rates were affected by strike-induced congestion speculations, climbing 32% to US$2,533/FEU in October. European port congestion and capacity reductions stemming from US port delays might keep these rates elevated.

Ex-Asia freight rates are poised to continue their descent barring capacity adjustments by carriers and a demand uptick preceding the Lunar New Year. North American trade faces uncertainties, including potential East Coast and Gulf port strikes related to ILA and USMX contract negotiations and the impact of the US presidential election outcomes on tariffs and shipping volumes.

In labor developments, Montreal port workers conducted a one-day strike, with another scheduled, though these actions have not significantly disrupted operations. In Chittagong, a trucker strike is impacting container movements. Meanwhile, air cargo volumes from Asia are rising, with the Freightos Air Index China - N. America rates nearing US$7.00/kg, a notable increase from earlier in the year.

Source: Container News