Ocean rates on the major tradelanes remained stable again this week though still extremely elevated with Asia-U.S. West Coast rates and Asia-Europe rates at about 10X the pre-pandemic norm. The expectation is that demand will increase somewhat ahead of Chinese New Year (CNY) which begins Feb. 1, so rates are likely to tick up again soon.
But even after CNY, expectations are that high consumer demand and low inventory levels will keep rates elevated well into next year.
How will the omicron surge impact ocean freight? As increased spending on goods is the underlying driver of much of the congestion, delays and disruptions, if the spread of omicron prolongs that shift away from spending on services it will likewise push the ocean shipping return to normal that much farther away.
Outbreaks at Chinese ports could cause reductions in operations like the one seen in Yantian this past summer, which could cause further delays, reductions in capacity and price increases too.
Air rates are currently feeling even more upward pressure than usual during the air peak season – which is coming to a close – primarily from reduced passenger jet capacity, but also from some ocean to air conversions and overwhelmed ground handling crews at many airports. If more passenger flights are canceled due to omicron, air cargo capacity could get even tighter.
Freightos marketplace data shows air cargo rates from Shanghai to the US West Coast were more than $16/kg last week, a 25 percent increase in the past month, and more than 4X typical levels.
- Ocean rates went unchanged this week, with increases expected in the coming weeks heading into Chinese New Year.
- The omicron spread has yet to impact logistics directly, but if the spread prolongs the consumer shift to spending on goods and away from spending on services it will likewise push the ocean shipping return to normal that much farther away.
- If outbreaks occur at Chinese ports, they could cause reductions in operations like the one seen in Yantian this past summer, which could cause further delays, reductions in capacity and price increases too.
- With the air cargo industry already struggling with a shortage of capacity, more passenger flights canceled due to omicron will mean capacity could get even tighter, putting more pressure on already record rates on some lanes.
- Asia-US West Coast prices (FBX01 Daily) fell 2 percent to $14,616/FEU. This rate is 277 percent higher than the same time last year.
- Asia-US East Coast prices (FBX03 Daily) increased 1 percent to $16,680/FEU, and are 238 percent higher than rates for this week last year.