Ocean freight market update
China-North America
- Rate changes: Ocean freight rates from Asia to the US West and East Coasts have experienced a downward trend, with rates decreasing by approximately 4% on both coasts according to the market indices. This marks a continuation of the decline observed in recent weeks, driven by easing demand and operational stabilizations. The rates to the North American West Coast are now around 24% lower than their peak in February, while rates to the North America East Coast have seen a 30% reduction from their late January highs. Analysts suggest that rates may stabilize at a new elevated floor, despite these decreases.
- Market changes: The ports of Los Angeles and Long Beach have reported significant increases in container throughput, highlighting a boost in market confidence and operational efficiency. The port of Los Angeles, in particular, saw a 60% increase in TEUs processed in February year-over-year, with a notable rise in import containers. This uptick is attributed to shippers hedging against the US East Coast labor contract negotiations and a general positive economic outlook, suggesting a potentially early peak season.
China-Europe
- Rate changes: Spot rates from the Far East into Europe continue their downward trajectory from their peak during the Red Sea crisis, with a significant reduction to rates into the Mediterranean and North Europe. Despite these adjustments, rates remain significantly above their pre-crisis levels, indicating sustained market pressure despite the recent declines. The market is closely monitoring the potential for further decreases as ships continue navigating longer routes via the Cape of Good Hope.
- Market changes: The operational landscape for carriers remains challenging, with the fourth quarter of 2023 witnessing the first operating margin drop below zero in five years for major ocean freight container carriers. This financial strain underscores the need for carriers to manage risks and adapt to changing market conditions effectively. Additionally, the increase in container shipping imports from China to Mexico highlights new dynamics in trade patterns, potentially impacting the traditional Asia-Europe routes.
Air freight/Express market update
China-US and Europe
- Rate changes: The air freight sector has seen a dynamic shift with rates experiencing substantial increases from China to North America and Europe. The Freightos Air Index reports a 50% weekly increase in rates to North America and a 32% increase to Northern Europe, underscoring a significant rise in demand. This upward trend contrasts with the general decline in ocean freight rates, highlighting the air freight market’s volatility.
- Market changes: Global air freight demand shows signs of stabilization with notable increases in tonnage in some European trade lanes, reflecting a threefold increase compared to the previous year. This surge is primarily due to shippers opting for sea-air routes to circumvent delays caused by extended transit times around southern Africa. Additionally, the air cargo market continues to adjust to capacity changes and operational shifts, with Asia-Pacific volumes rebounding post-Lunar New Year, driving a considerable part of the current demand.
Disclaimer: All information and views in this post are provided for reference purposes only and do not constitute any investment or purchase advice. The information quoted in this report is from public market documents and may be subject to change. Alibaba.com makes no warranties or guarantees for the accuracy or integrity of the information above.
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