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Ocean Freight
China-US West Coast prices fell 3% since the week of July 20th to $2676/FEU. This rate is 74% higher than the same time last year. China-US East Coast prices also dipped 3% to $3236/FEU, and are 10% higher than rates for this week last year.
Transpacific container spot rates to the US west coast have surpassed the $3,000 mark to hit a record of $3,167/FEU The US west coast component of Shanghai Containerized Freight Index (SCFI) soared 17% on the back of August 1st GRIs and is now 100% higher than it was a year ago. The spot rate surge represents the highest reading for the west coast in the decade-long history of the index and the rate could go higher in the coming weeks.
As a result of sailing constraints, shippers are reportedly being asked to book two weeks in advance to ensure their shipment will get on the desired sailing. It is possible that as these backlogs are cleared with August’s increase in available capacity. The high rates and additional lead time to ship by ocean are pushing some time-sensitive shipments from ocean to air, contributing to the recent increase in air rates.
Air Freight
Air cargo rates from China to the US and Europe increased for the second consecutive week, after falling steadily since mid-May and now are returning to pre-Covid rates as we move into August. Forwarders are reporting the likelihood of a quiet August in air freight. Rates next month are set to fall, with prices currently quoted by airlines at the normal August rates, with the exceptions of some pockets of high prices such as those in Australia which remain three times higher than normal.
United Airlines saw a 128% increase in yields in the second quarter despite having no freighters and barely any passengers. With their belly capacity, United grew cargo revenue by 36% year-over-year as it operated its passenger-turned-freighters. Pure cargo airlines, have seen higher profits, expectedly, but there are predictions of strong third and fourth quarters with tech product launches arriving. When one is ready, Covid-19 vaccine shipments could send the air freight industry into another frenzy, with forwarders already expressing concern about securing space toward the end of the year.
