FBX Index August 2024: Market summary

Ocean rates on the world’s major trade lanes remained leveled off or started to ease in August after the likely-peak of peak season demand, along with Red Sea congestion and adjustments still tying up capacity combined to push rates up from early May to highs for the year by mid-July.

An early start to peak season may have meant a little less demand-side pressure on rates in August, but the remaining strong demand and congestion have kept prices high. As demand will likely ease in September, rates will likely face less upward pressure as well, but rates will remain well above typical levels as long as Red Sea diversions remain a factor.

Ocean rates out of Asia to Europe and the Mediterranean have eased about 8% from their July peaks, with prices from Asia to North Europe falling 5% month on month in August to $7,965/FEU but remaining five times higher than in August 2019.

To the Mediterranean, prices fell 9% in August to $7,099/FEU but are 211% higher than 2019 levels. Longer lead times from journeys around the Cape of Good Hope mean peak season goods that are not shipped before Golden Week will not arrive in time. As a result, demand and rates are likely to decline in the coming weeks.

Rates from Asia to the West Coast of North America – which had eased about 20% from their July peak by mid-August – climbed by more than 10% in late August on mid-month GRIs to close the month at $7,115/FEU, 7% lower than July and 455% higher than in 2019. However, a likely easing of volumes in the coming weeks on this lane, combined with recent capacity increases and reports of some carriers already offering discounts, support skepticism that these recent increases will stick.

Meanwhile, the possibility of an ILA port worker strike in October at East Coast and Gulf ports in the United States still looms. Some added urgency to ship goods from Asia to US East Coast ports in the hope of receiving them before the union contract expires at the end of September may have contributed some additional upward pressure on spot rates to the US East Coast in the last few weeks.

Prices on this lane have remained at about their peak level since mid-July while the other major lanes have seen rates easing somewhat. Prices from Asia to the US East Coast dipped just 1% month on month in August to $9,698/FEU, 268% higher than in 2019 levels.

If there is a strike in October however, rates to the West Coast would likely increase as shippers shift volumes away from the East Coast and as a backlog of containers and vessels at East Coast and Gulf ports ties up capacity.

Ocean rates on the transatlantic – which increased by about $600/FEU early in the year as Red Sea diversions absorbed capacity – have remained about level at $1,800/FEU ever since. Prices were stable even as demand gradually improved in the first half of the year since enough capacity stayed in the lane to keep rates from climbing.

Rates dipped by 10% in August to $1,619/FEU, but carriers have announced rate increases – some as high as $1,000/FEU – for September. Despite reports of some pull forward of goods ahead of the possible strike in the US, shippers are skeptical that market conditions will allow much of an increase.
Source: Freightos