Key insights:

Breathe a sigh of relief. China-US ocean rates went unchanged this week, marking only the second time since the end of May that a scheduled General Rate Increase (GRI) was not introduced. But record levels of capacity into November indicate that carriers expect demand to be strong post-Golden Week. 

Early holiday promotions are part of the current driver, but major retailers restocking low inventories could keep volumes strong – and rates elevated – well into 2021.

China-US rates:

China-US West Coast prices (FBX01 Daily) went unchanged this week at $3,872/FEU. This rate is still 197% higher than the same time last year.

China-US East Coast prices (FBX03 Daily) also stayed steady at $4,685/FEU, and are 89% higher than rates for this week last year.

Analysis

As the Golden Week holiday comes to an end, China-US ocean rates stayed level for the second straight week – one of only two times that a possible General Rate Increase was not introduced since May.

By restoring and even adding extra capacity for the rest of October, carriers have brought supply to record levels, as they anticipate strong demand at least into November. 

Whether or not rates will climb given the criticism of already record prices and steps by regulators to stem the tide remains to be seen. But strong demand could mean elevated prices as long as these volumes last.

One driver of current demand is the “early” holiday season: some large retailers have started holiday promotions early to reduce large crowds in their stores and spread out the strain on fulfillment. Amazon’s later than normal Prime Day is also contributing to this trend. 

But some expect strong demand well past the usual drop off in November. Many large US retailers are finally restocking after inventories ran down to very low levels during the outbreak. And this historic restocking cycle could keep demand at peak season levels even into 2021. 

Freightos.com marketplace data showed China-US air cargo rates stable this week, though prices are expected to keep climbing this peak season as capacity is still constrained by a lack of passenger flights. That said, they aren’t expected to reach the extreme PPE-driven peaks seen in May, as some major retailers have chosen to rely on their own chartered flights to guarantee space, leaving more capacity on scheduled carriers for the rest of the market. 

- Eytan Buchman, CMO