Key insights:

Peak season demand is increasing delays at LA/Long Beach once again. And capacity stuck at bay only means more pressure on ocean rates, where container prices including required premium charges from Asia to the US West Coast climbed 5% to start the month, up to more than $19k/FEU and more than $20k/FEU to the East Coast. 

Infection upticks in China are raising concerns of lockdowns there, and the unwelcome effect they would have on a logistics ecosystem already stretched past its limits.

Asia-US rates:
Analysis

  • Asia-US West Coast prices (FBX01 Daily) increased 5% to $19,237/FEU. This rate is 619% higher than the same time last year.
  • Asia-US East Coast prices (FBX03 Daily) climbed 6% to $20,804/FEU, and are 543% higher than rates for this week last year.

As ocean freight peak season continues to heat up, congestion and delays at the ports of LA/Long Beach are on the rise once again. The amount of time that many container ships are spending waiting in a bay is a major contributor to the estimate that – even as demand continues to climb – it currently takes 25% more fleet capacity than usual to move the same volume of cargo. 

Non-stop demand and scarce capacity made worse by delays are also keeping freight rates climbing.  Since last week, prices from Asia to the US West Coast, including typical premium surcharges, increased by 5% to more than $19,000/FEU, more than seven times their level a year ago, with East Coast rates hitting an astounding $20,804/FEU. 

Many US importers have had enough, including one home furnishings importer who filed a claim against several ocean carriers with the Federal Maritime Commission (FMC) this week. The $600k suit accuses the carriers of collusion and of not honoring the terms of long-term contracts in order to push importers to the spiking spot market. In addition to considering the claim, the FMC is also looking into the legality of some surcharges introduced by carriers. 

And as logistics disruptions caused by the recent coronavirus outbreak in Vietnam continue, concerns are growing about upticks in infections in China, and the possible crisis lockdowns there could cause for a logistics ecosystem already stretched past its limits.