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FBX Index November: Looking forward

Pushing through October we saw what was fairly predictable levels of volatility crossing through Golden Week (seeing the FBX01 route come off by $3,029 and immediately recovering $628) and fresh congestion into the US West Coast on the back of a rush of cargo, bringing the total ships at anchor at LA/Long Beach ports beyond the 100 vessel mark. The market inside of Q4 2021 for Asia-US and Asia-Europe has been overwhelming bullish, if only due to the sheer volume of cargo lag through global supply chains, with extended transit times stretching out bullish conditions through beyond the seasonal peak.

However, further out into 2022, we’ve also seen periods consistently re-price as interest firms up down the forward curve. This has been spurred on by a push for contract listing which has been driving much more activity on the FFAs market. The difference now versus the start of the year has been stark – FBX01 Cal22 sat at $3,050 (or around $6,000 factoring premiums) on February 9, it now sits at $9,166/FEU as of November 2. FBX11 has also been carried up on the same periods from $4,300/FEU to $9,187/FEU. There has also been drastic inflation on anecdotal long-term contract rates following an almost identical trend as the forward curve prices. This has opened opportunities for freight forwarders to take the reins on the sell side of the FFA’s market – especially with the development of very long-term (two to three year) deals putting many forwarders in a risk position for 2023 and 2024.

On the back of this, we’ve seen interest for FFAs extend well into 2024, exceeding what is available on the physical market. This is promising for our development of an FFAs market in container freight. However, it should provide an indication of the scope of FFAs in a curve that is substantially discounted for 2023 and 2024.

About Peter Stallion, Head of Air and Containers, Freight Investor Services

Peter Stallion heads up the Air and Container Freight desks at FFA brokerage Freight Investor Services. He started his career in air freight chartering, and has a passion for emerging risk management markets and the logistics industry.
Source: Baltic Exchange

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