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Following the holiday rush demand for air cargo dipped at the start of January (with rates still at twice their typical rates for this time of year), but demand is now back to 7 percent higher than December levels, according to freight marketplace Freightos.
Port congestion and delays caused by still-surging container volumes and build up to the Chinese New Year helped push Asia- U.S. West Coast rates up by 3 percent. With no additional ships available to deploy or to charter, carriers are cancelling sailings in order to catch up with schedules.
China- U.S. rates:
China- U.S. West Coast prices (FBX01 Daily) increased 3 percent to $4,455/FEU. This rate is 193 percent higher than the same time last year.
China- U.S. East Coast prices (FBX03 Daily) dipped 1 percent to $5,712/FEU, and are 101 percent higher than rates for this week last year.
Non-stop demand for ocean freight continues to plague the industry in the form of port congestion and resulting delays and equipment shortages. Ships skipping the clogged LA/Long Beach port are now causing a backlog outside the Port of Oakland, and the Federal Maritime Commission is asking the new U.S. administration to prioritize dock worker vaccinations and ease the labor constraints caused by recent outbreaks and making matters worse.
Normally, carriers activate recovery vessels, or alternate ships, to take the place of a delayed vessel. But with essentially all capacity already in use and no ships available for charter, carriers are simply cancelling sailings to catch up with schedules. But even this move is not expected to slow the surging volumes.
The impact of these delays is already being felt in the retail, manufacturing and food supply chains, to name a few. The demand and equipment shortages were enough to push rates up this week by 3 percent from Asia to the U.S. West Coast, though rates to the East Coast and from Asia to North Europe and the Mediterranean stayed level. The generally stable Europe to South America West Coast spiked 31 percent to more than $2,300/FEU.
As Chinese New Year approaches, it remains to be seen how extensive the closure of manufacturing will be and the extent to which trucking will be affected as the government enacts travel and quarantine rules to help contain the latest outbreaks.
Likewise, Freightos.com marketplace data shows that air cargo rates from Asia to U.S. and Europe destinations climbed by as much as 10 percent this week ahead of the holiday, though virus-related restrictions may impact air shipments as well.