Review of sea freight rates ex Asia

Spot sea freight rates from Asia to Northern Europe spiked last week by 25%, but may now have fallen back over 7%, while average spot rates from Asia to the US West Coast have increased 70% over the last two months, with the lines successfully implementing a series of monthly general rate increases.

We keep a watchful eye on the trans-Pacific trades, because what is happening there may well recur on Asia to Europe routes, often within weeks, particularly when a strategy the lines are pursuing to restore revenues is effective.

The peak season from Asia to the US and Europe typically runs between July and October, and while this year’s peak may build gradually or not appear at all, the trans-Pacific market has seen capacity pressure grow, due to some demand recovery, vessel diversions aways from the ILWU Canada strikes and Panama Canal restrictions.

Asia-Europe current peak season volumes may not be sufficient to support freight rates, after the recent increases, with some carriers signalling there could be flexibility on FAK rates and they may ultimately be happy to simply hang on to a percentage of the latest GRI increases.

Despite the absence of peak season surges, trans-Pacific carriers have implemented general rate increases (GRIs) in April, June, July and August, solely on the basis of underlying trade lane economics.

High capacity utilisation on the trans-Pacific routes and especially to the West Coast, is likely to ensure that rates remain elevated, aided by diverted vessels from Canada West Coast gateways (though these will be mitigated after the ILWU Canada’s labour agreement acceptance) and more blank sailings. 

There is a clear link between the sharp uptick in trans-Pacific blank sailings from the end of June, and the subsequent improvement in spot rates and this is a trend which is expected to intensify on trans-Pacific and Asia to Europe trades, as huge amounts of new vessel capacity is delivered through 2023 and 2024. 

The sea freight market is multi-layered and complex, which is why we work closely with our network partners in the US, China and across Asia, to identify opportunities for our customers.

If you have any questions or concerns about the developments outlined in this story, please EMAIL Colin Redman now for the latest insights and intelligence.