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FBX Index July: Market Summary

The Freightos Baltic Global index fell 6% to $6,159/FEU in July, driven by rate decreases on lanes ex-Asia to the US West Coast and Europe. With these decreases, and as prices climbed sharply in July last year, this rate is 39% lower than its level a year ago, although it is still more than four times the pre-pandemic norm.

Asia – US West Coast prices fell 13% since the end of June to $6,593/FEU, a level last seen in early May 2021. This rate is 55% lower than at the start of the year and 64% lower than its level last July as rates soared toward a record high. Compared to May and June in dollar terms, the fall in July slowed, although rates are still more than four times pre-pandemic norms.

This significant drop in ocean rates over the last three months is one of several conflicting indicators of what the future may hold on the transpacific. Falling ocean rates at a time they are normally climbing, as well as growing inventories and climbing inflation, suggest a slow-down in demand, but still-strong consumer spending and ocean volumes in June, increases in scheduled capacity through October and the anticipation of declining but still-strong volumes over the coming months, point to the other direction.

Whatever the underlying level of demand, one factor keeping

Whatever the underlying level of demand, one factor keeping rates elevated relative to the norm is persistent congestion. Asia – US East Coast rates are nearly 50% lower than last July and 38% lower than at the start of the year. However, at $10,316/FEU, prices are 2% higher than a month ago. The shift of volumes from West Coast to East Coast ports has contributed to worsening congestion at East Coast hubs, and likely helped prevent a further rate slide this month.

Asia – North Europe prices fell 25% from early in the year up until May – likely spurred by energy-driven increases in inflation and decreases in demand – when prices stabilised due to worsening congestion and a reduction of capacity. Asia – Europe rates were still stable through most of July but decreased late in the month to $9,641/FEU, a 9% dip compared to June, 33% lower than at the start of this year and 30% less than a year ago.

However, prices are still more than six times typical levels, and severe congestion at major hubs and labor disruptions in Germany may slow rate decreases even if demand continues to soften on worsening inflation.
Source: Baltic Exchange, Freightos

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