“Fluctuating fortunes for the ocean and

While spot rates are going in the right direction for ocean freight from the Far East to the east coast of South America, short-term air freight rates are not taking off on major intra-Asian trade and long-haul, according to Xeneta.

“Certainly, when it comes to ocean freight rates, the long-term market tends to catch up with the spot market, with a lag of about three months,” said Peter Sand, chief analyst, Xeneta. “So, for example, the drop in spot rates that we started to see in January on transactions from the Far East to South America was reflected in April and the following months. This reversal, where the region’s spot rates started to rise again from May/June, could have important implications for long-term deals ahead. Shippers wishing to renegotiate contracts, take note!

Xeneta’s analysis shows spot rates on the corridor fell nearly 40% in the first four months of the year, with South Korea’s rates falling more than China’s, Japan‘s and China’s. from Taiwan (Japan’s rates remained the highest). However, the current rally has now seen the Far East average spot rate climb from $2,900 to $10,600 per FEU on July 13. While this is a significant recovery, it is still down from early 2022 levels, when shippers paid an average of $12,400 per FEU.

“It’s interesting to see evidence of the ‘long-term lag’ here,” adds Sand, who points out that rates in the contracted market continued to decline in July (currently at $7,750 per FEU as of July 13, 2022). “This translates into opportunities for those with flexible logistics strategies,” he said.

As far as airfreight in the Far East is concerned, the trend seems to be going in the opposite direction, with short-term rates falling despite the increase in volumes and freighter capacities. The dynamic load factor from key hub Shanghai has also increased since the end of the last COVID-related lockdown, from 69% for all exports in April to 93% in June. This, however, was not enough to energize a relatively lackluster rate scene.

Long-haul exchanges were the hardest hit according to data from Xeneta, although all routes were affected by the drop in spot rates. Prices from Shanghai to the United States have collapsed by 32% since the start of the year, bringing tariffs to $8.5 per kg (for mid-level cargoes, between 500 and 1,000 kg), their lowest level since August 2021. Spot rates to Northern Europe have seen a similar fall, now sitting at just over $6 per kg – a rate you need to look back to September 2021 for the equal.

Short-haul fares saw less dramatic declines, largely returning to levels seen at the start of the year. From Shanghai to Hong Kong, prices have fallen to $2.32 per kg, from $3.5 per kg in early May 2022, short-term rates to Singapore have seen a 6% drop since January 1 (4, $2 per kg on July 1), while those to Japan are the biggest mover, down 25% year-to-date to $3.1 per kg.

“This is a changing market,” Sand concludes, “with COVID and the fear of increased cases and future lockdowns waiting in the wings to influence rates going forward. It is difficult to predict developments, it is therefore essential to have the latest data on tariffs to better understand and value any tariff negotiation.

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