Freightos: Weekly Ocean Freight Index Update

Global ocean freight rates remained elevated this week, though the uptrend seemed to be slowing down. As the holiday season approaches, the global shipping industry continues to navigate a complex landscape shaped by geopolitical uncertainties, labor dynamics, and shifting market demands.

The Freightos Baltic Index, dated 21 November 29, reported the following week-on-week changes in booking rates:

Key takeaways: 

After weeks of dramatic surges, ocean freight rates along the transpacific route have reached a period of relative stability. This crucial corridor, connecting China’s manufacturing centers to North America’s consumer markets, typically sees subdued activity at this time of year. However, current rates remain significantly higher than the cyclical lows observed during April's off-peak season, reflecting sustained demand driven by several key factors.

Analysts point to shippers frontloading cargo to mitigate potential disruptions. These include anticipated tariff increases from the incoming US administration, and the possibility of an International Longshoremen’s Association (ILA) strike at East Coast and Gulf ports after January 15. The earlier-than-usual Lunar New Year, beginning at the end of January is also expected to intensify shipping demand as early as late December, potentially putting further upward pressure on rates. 

Meanwhile, the Asia-Europe trade lane has experienced a sharp increase in freight costs, with rates climbing by approximately 30% since early November. To reflect heightened demand, carriers have introduced General Rate Increases (GRIs), with some aiming to push December rates above $6,000/FEU. This surge is seen as a precursor to the annual contract negotiation season with Asia-Europe Beneficial Cargo Owners (BCOs).

In Canada, recent disruptions caused by labor disputes at major container ports have subsided following government intervention. With normal operations resuming, global supply chains are experiencing some relief, particularly through improved container equipment availability.

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