FBX Index July 2024: Market summary

The Freightos Baltic Global index spiked 30% month on month in June to $4,446/FEU, surpassing its February peak by 30% as an early start to peak season, combined with worsening Red Sea-driven congestion, have been pushing rates up to their highest levels since mid-2022 when prices were coming down from their pandemic highs. Overall, the global benchmark is 238% higher than in 2019.

On the Transpacific, some of the early demand increases that started in May are from specific product categories being pulled forward ahead of August tariff increases on some Chinese goods. Other shippers started moving peak season goods early to avoid possible Red Sea-driven delays later in the year, which would threaten inventory availability in Q4, with the recent increase in disruptions and rates possibly spreading that urgency to other importers as well. In addition, concerns over a possible East Coast and Gulf port labour strike in October are likely also playing a role.

For Asia-Europe trade, some of the current volume increase reportedly already included peak season goods in May and June, although July tariffs on Chinese electric vehicle imports may also be driving some demand.

The heavy carrier reliance on transhipment as a strategy to maintain schedule reliability while vessels are diverting away from the Red Sea has led to significant congestion at ports like Singapore and Barcelona, as well as knock-on vessel bunching at major ports in China. So far, congestion has not been a factor at destination ports.

This combined demand increase and effective capacity reduction saw rates from Asia to N. America West Coast rise 39% month on month to $6,840/FEU to close June, surpassing the February peak on this lane by 40%. Rates are nearly five times higher than in 2019. On the East Coast, rates rose 28% to $8,113/FEU and are 20% higher than in February and 206% higher than June 2019.

This combined demand increase and effective capacity reduction saw rates from Asia to N. America West Coast rise 39% month on month to $6,840/FEU to close June, surpassing the February peak on this lane by 40%. Rates are nearly five times higher than in 2019. On the East Coast, rates rose 28% to $8,113/FEU and are 20% higher than in February and 206% higher than June 2019.

Rates from Asia to N. Europe rose 44% month on month to $7,001/FEU and are 27% higher than their January peak and 447% higher than 2019 levels. To the Mediterranean prices rose 27% month on month to $7,169/FEU, just 6% higher than in January but 308% higher than in 2019.

With transpacific demand projected to peak in August, rates are likely to continue climbing, with additional surcharge hikes and General Rate Increases announced for July to N. America and Europe, which could push rate levels up to about $10,000/FEU on some lanes soon.

However, with tariff-driven volumes likely to decline in the coming months, and if an early start to peak season means a significant share of seasonal goods are being pulled forward, demand pressure could ease earlier than usual. When demand does ease, rates can be expected to fall as well, although no lower than the floor reached in March and April – about double 2019 levels – as long as Red Sea diversions continue.
Source: Freightos