Ocean rates between Asia-Europe fell back to levels seen pre-pandemic on March 2019, according to a new analysis from Freightos.

In its report, the global freight booking and payment platform said last week's average Asia-Europe container rate decreased by 17% compared to a week prior.

"But the latest daily rates indicate prices are now at about the US$1,500/FEU level, a 40% drop since the end of February and about on par with March 2019 rates," commented Judah Levine, head of research at Freightos Group.

"This significant come-down suggests Asia - Europe ocean trade has entered price war territory as demand continues to slide and carriers are keeping some excess capacity active," he added.

The Freightos report noted that Asia - Mediterranean prices are at about US$2,755/FEU, a 30% drop since February but still 30% higher than in 2019.

"The February reading of the US Federal Reserve's supply chain disruption index indicates that conditions have now returned to historically normal levels," Levine added.

"The removal of disruptions, together with decreases in demand, continue to push transpacific ocean rates lower as carriers appear willing for now to compete on price for market share here too," he further said.

Meanwhile, for Asia - US West Coast, the report said prices are now just above the US$1,000/FEU mark, which is 93% lower than a year ago, 30% lower than in March 2019, and, in fact, lower than any point in 2019.

Rates to the East Coast are 87% lower than last year and 15% lower than in March 2019, it added.

A recent joint statement from West Coast port operators and the ILWU reported that both the ports and the union are hopeful that a deal would be reached soon, and negotiations have begun on other West Coast labour issues in the US and Canada as well.

But Freightos noted that it remains to be seen if the significant discount to ship to the West Coast relative to East Coast rates will be enough to entice some importers — who shifted volumes to East Coast destinations to avoid potential labour disruptions — to shift back to the west before a new agreement is signed.

Levine noted that some ocean carriers who used record profits to expand to air cargo are now pulling back on air capacity, too, as demand for air cargo continues to fall.

Some airlines are nonetheless optimistic that this year's revenue will be stronger than in 2019, even if volumes are well below last year's levels.

Increased air cargo rates

Freightos noted that Freightos.com air cargo data shows transpacific rates increased by about 10% last week, though they were half their level a year ago.

And Freightos Air Index rates from Asia to North Europe were US$4.62/kg last week, 30% lower than a year ago, but still about double 2019 levels.

Meanwhile, the report noted that Asia-US West Coast prices (FBX01 Weekly) fell 8% to US$1,071/FEU. This rate is 93% lower than the same time last year.

Asia-US East Coast prices (FBX03 Weekly) decreased 10% to US$2,344/FEU and are 87% lower than rates for this week last year.

Asia-North Europe prices (FBX11 Weekly), meanwhile, dropped 17% to US$2,179/FEU and are 84% lower than rates for this week last year.



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