Overall
This week, the Drewry composite index experienced a 4% increase, yet it has registered a 151% increase compared to the same period last year. The World Container Index (WCI) is now 198% higher than the average rates before the pandemic in 2019. Additionally, the average index for the year-to-date significantly exceeds the 10-year average, highlighting the lasting impact of the exceptional conditions during the 2020-2022 period.
Freight rates between various ports have shown diversity; rates from Rotterdam to New York decreased 1%. Rates from Shanghai to Los Angeles increased by 2% and rates from Shanghai to New York increased 6%. Drewry expects freight rates ex-China to continue rising next week due to the onset of the early peak season.
Ocean Freight Insights
In May, Transpacific Eastbound ocean freight has entered peak conditions with imports up by 6.8% year-over-year (YoY). This surge in demand is expected to continue through the traditional peak season, with June imports projected to be 10.7% higher YoY. Floating rates have seen a significant impact, with the recent General Rate Increase (GRI) holding firm. Another GRI is anticipated due to these sustained peak conditions. Vessels departing from Asia, particularly from Vietnam and South/East China (Yantian, Shanghai, Ningbo), are expected to be fully booked through May and June, with the Pacific Southwest already full and the Pacific Northwest nearing full capacity by the end of the month and into June.
Starting June 1, carriers will implement a Peak Season Surcharge (PSS), which is likely to increase again on June 15. Importers should brace for a challenging peak season and consider early actions to mitigate uncertainties.
In the Far East Westbound market, conditions continue to tighten with space constraints expected to persist at least until mid-June. Port congestion, equipment shortages, and delays from vessels rerouting via the Cape of Good Hope have resulted in low reliability and numerous blank sailings from Asia. Demand remains stronger than usual, prompting rate increases for the first and second halves of June. This surge is driven by consumer demand and companies building stock to counter longer lead times and secure space. Shippers are advised to push cargo for earlier departure to avoid further freight cost increases, and those with urgent cargo should consider Premium options to ensure priority loading and avoid delays. Bookings should be made early, in smaller slots, and empty containers picked up promptly.
For U.S. exporters, container availability has become increasingly challenging due to global shipping disruptions impacting the flow of laden and empty containers. Extended transit times from routing around the Cape of Good Hope and growing port congestion further complicate the container equipment situation, particularly for shippers loading at inland rail points. Key transshipment hubs for U.S. exporters, such as Asia Base Ports and the Strait of Gibraltar ports (Tanger-Med and Algeciras), are experiencing significant congestion.
Global Air Cargo Update
In the global air freight sector, tonnages rebounded by 2% in week 20, following a similar increase the previous week. Average global rates rose by 2% YoY and are up 40% from May 2019 levels. Tonnages from the Middle East & South Asia to Europe saw a significant increase, with Dubai leading at 148%. Rates from this region to Europe have more than doubled, up 119% YoY. From Bangladesh to Europe, rates increased nearly threefold (186% YoY), while India to Europe rates, though slightly eased, are still up 163% YoY.
Asia Pacific dynamics show a 15% YoY increase in tonnages, with rates up 10%. China to Europe tonnages increased by 19% and 10% in weeks 19 and 20, respectively, while Hong Kong to Europe tonnages rose 31% YoY. Vietnam to Europe rates have doubled (120% YoY), with a significant increase over the past eight weeks. Japan saw the largest two-week-on-two-week tonnage increase among top destination markets (16%) following the Golden Week holiday.
We are continuing to monitor all lanes, ports, and services to provide you with the best possible service at the best possible price.
M.E. Dey and Co. monitors the market daily to find competitive rates that pair well with exceptional transportation services. We provide fixed-rate contracts in addition to standard market rates. Contact us to talk with a representative or request a quote to get started.