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FBX Index June: Market Summary

The Freightos Baltic Global index fell 14% to $6,583/FEU in June driven by rate decreases on the transpacific lanes. This rate is 9% lower than its level a year ago – marking the first monthly annual decrease since early 2020 – although still more than four times the pre-pandemic norm.

Shanghai gradually reopened over the course of the month. However, the possible surge of ocean volumes from demand pent up during the lockdown – that many in the industry expected to increase congestion and ocean rates – has not materialised.
Many of the containers that couldn’t be exported via Shanghai may have successfully been diverted through alternate ports. But at the same time, there are growing signs that underlying demand in the US – which has been a major driver of sky high rates and congestion – is in flux.
Reports by major retailers of surplus inventory, and a resulting slowing in orders suggest a decrease in consumer demand,at least for certain goods,as consumers shift spending to the inflated costs of necessities, to services, to other types of products – or all of the above.
Asia – US West Coast prices dropped nearly 30% since the end of May to $7,599/FEU. Rates are nearly 50% below their level at the start of the year and 14% lower than its level a year ago. Although still five times pre-pandemic norms, this is the first monthly annual decrease since early 2020 and shows that prices are trending down at a time that they were already climbing on peak season demand a year ago.

Falling transpacific ocean rates also suggest that demand has decreased: Asia – US West Coast prices dropped nearly 30% since the end of May to $7,599/FEU. Rates are nearly 50% below their level at the start of the year and 14% lower than its level a year ago. Although still five times pre-pandemic norms, this is the first monthly annual decrease since early 2020 and shows that prices are trending down at a time that they were already climbing on peak season demand a year ago.

Likewise, Asia – US East Coast rates ended June at $10,113/FEU, 27% lower than a month ago and 13% lower than this time last year.
Asia – North Europe prices were stable this month – and have been since early May – increasing 1% to $10,634/FEU, but have decreased 26% since the start of the year. Prices are 3% lower than this time last year, although still seven times more than typical levels. Worsening congestion complicated by labor disputes at some major ports may be serving to keep rates level, despite signs of inflation impacting demand in Europe as well.

Of the major tradelanes, only transatlantic prices are higher than at the start of the year. Europe – US East Coast rates fell 4% to $8,033/FEU this month but are 13% higher than at the start of the year and 42% higher than a year ago. Demand has remained strong, and – even with capacity diverted from Russian ports to the lane – congestion in European and East Coast ports continue to slow operations and put pressure on rates.

If underlying demand, especially on the transpacific, has in fact eroded significantly enough, then we could expect an atypical decrease in rates even as we move deeper into the traditional peak season. At the same time, if carriers find themselves with excess capacity, we could also expect an increase in blank sailings to match capacity with demand, which could slow the price decline.
Source: BalticExchange, Judah Levine, Research Lead, Freightos, FBX Index June: Market Summary (balticexchange.com)

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