FBX Overview
Asia-US West Coast prices (FBX01 Daily) dipped 3% to $8,934/FEU. This rate is just 1% higher than the same time last year.
Asia-US East Coast prices (FBX03 Daily) fell 1% to $11,589/FEU, and are 16% higher than rates for this week last year.
There were more signs this week of inventory surpluses and a resulting slowing in orders by major retailers suggesting a decrease in demand – at least for certain goods – as consumers shift spending to services or to the inflated costs of necessities, or both.
A recent survey of freightos.com marketplace users shows that SMB importers are experiencing these trends too: More than half of respondents report they’ve placed peak season orders early in the hopes of building inventory. Two-thirds said they are already experiencing a decrease in demand, with 84% of those attributing that dip to inflation.
Minimal port congestion in Shanghai shows there’s still no sign of a surge of pent up demand many expected to follow the city’s reopening. Port congestion has also continued to improve at LA/Long Beach in the last two months, with fewer than 20 ships waiting for a berth currently, as a near record number of containers were processed in May.
Freightos.com data for end-to-end ocean shipments from China to the US confirm this improvement showing average transit times so far in June have dropped nearly 25% since the start of the year – level with a year ago, though still significantly higher than pre-pandemic norms.
The reduction in congestion is likely helping to keep more capacity in rotation and, though the signs of growing inventories and dropping demand don’t easily jive with still-strong volume projections, transpacific container rates are still falling (moderately) at a time they were already beginning to climb last year: Asia – US West Coast rates have fallen 17% so far in June, while rates climbed 11% in June 2021.
Whatever the underlying driver of more readily-available space and falling rates – relative improvements in container flows, volumes still to come as Shanghai rebounds, or a decrease in underlying demand – for now spot rates for many shippers both on the transpacific and to Europe are beneath contract rates.
Ocean contracts are notorious for not being honored during market swings. New forms of enforceable or index-linked contracts are working to solve the problem. But in the short term some carriers are reportedly looking to penalize contracted shippers who no-show in favor of savings on the spot market – another wrinkle that could add some instability at a time that many carriers and shippers might prefer better reliability.
