Weekly highlights

Ocean rates – Freightos Baltic Index

Asia-US West Coast prices (FBX01 Weekly) increased 13%.   

Asia-US East Coast prices (FBX03 Weekly) increased 14%.

Asia-N. Europe prices (FBX11 Weekly) increased 3%.

Asia-Mediterranean prices(FBX13 Weekly) increased 20%.

Air rates – Freightos Air Index

China – N. America weekly prices increased 12%.

China – N. Europe weekly prices decreased 3%.

N. Europe – N. America weekly prices decreased 3%.

Analysis

Negotiations to end the war in Iran continue – though military strikes do too – with many vessels once again moving closer to the Persian Gulf side of the Strait of Hormuz in hopes that the waterway may open soon. 

When the strait does re-open, ships will rush to exit, but out of concern over getting closed in again, carriers may not be as eager to return to regular Gulf port calls until they are convinced that the region is stable and that transiting is safe.

A re-opening could lead to some congestion at Far East ports when unscheduled vessels start arriving. And though the renewal of petroleum flows through the Strait will lead to lower oil prices, a return to pre-war supply and price levels will take months – with the recovery for refined oil products like bunker and jet fuel expected to take even longer. 

In the meantime, container rates on the major east-west trades are climbing from their elevated fuel cost baselines as peak season demand kicks in on both Asia – Europe lanes and the transpacific.

May GRIs have pushed Asia – N. Europe rates up $300/FEU to about $2,900/FEU since the end of April, back to their war-time high hit at the end of March and within $100/FEU of its pre-Lunar New Year high. Asia – Mediterranean prices shot up 20% last week to nearly $4,400/FEU, surpassing its March high by $100/FEU. 

Red Sea diversions that still mean longer lead times for European importers, as well as reports of contracted shippers frontloading ahead of higher fuel costs in July when new BAFs take effect, could both be driving the early start to peak season on these lanes. Carriers have announced additional GRIs and PSSs  – ranging from $600/FEU to more than $1,000/FEU – aiming to push rates up on these lanes further through mid-June. 

Successful mid-May GRIs saw transpacific rates increase by more than 10% on both lanes last week, signalling an early start to peak season for these trades as well, with coming BAF updates and Amazon’s announcement in late April that it was moving Prime Day up from July to June both possible drivers of some of the volume rebound. Maersk is adding an extra loader through August to accommodate expected stronger demand, with carriers announcing $2,000/FEU PSSs for June as well. 

For air cargo, jet fuel prices peaked in late March at a level more than double their pre-war rate. By mid-April some experts warned that regions like Europe only had a few weeks of supply left. Six weeks later however, supply is lower than normal but stable overall as refineries outside of the Gulf have increased production and demand for fuel has eased due to cost-driven flight cancellations. As a result jet fuel prices have decreased almost 25% from the March high and some carriers are reducing fuel surcharges in response. 

These trends, together with some continued carrier capacity recovery in and out of the Middle East have meant that air cargo rates – still well elevated relative to before the start of the war – are for the most part past the peaks reached from mid-April to early May. 

Freightos Air Index rate data show China – Europe prices eased 3% to less than $5.00/kg last week, with South Asia – Europe prices ticking up 3% to more than $4.50/kg but well below the $5.15/kg mark hit in April. SEA – Europe rates increased more than 10% to $5.20/kg, but likewise are 10% lower than the early May peak on this lane. 

China – N. America rates meanwhile have been climbing the last two weeks, including a 12% increase to $6.16/kg last week, possibly also driven by the approaching Prime Day as well as by resilient demand from AI-related hardware.