Key insights:
- Operations at the port of Ningbo are recovering much quicker than feared, which is a modicum of good news for US importers. Door to door shipments on the Freightos.com marketplace already took record times in August, 15% longer than in May and 46% longer than a year ago.
- COVID restrictions in China are leading to widespread cancelled flights, reducing air cargo capacity and pushing rates up. Freightos marketplace data show air cargo prices from China to the US and Europe have increased from 20% to as much as 40% since the start of the month.
Asia-US rates:
- Asia-US West Coast prices (FBX01 Daily) are at $18,425/FEU, a 50% gain since a month ago. This rate is 503% higher than the same time last year.
- Asia-US East Coast prices (FBX03 Daily) are at $19,943/FEU, a 30% increase in the last four weeks and 475% higher than rates for this week last year.
Analysis:
Despite fears of a Yantian repeat – where a coronavirus outbreak significantly hindered operations for three weeks – disruptions at Ningbo following one port worker’s positive COVID test have been much less extensive.
Though some carriers diverted ships to alternate ports and a backlog formed offshore, the port still managed to operate at 90% capacity since the closing of the affected terminal last week. The terminal resumed partial operations by Wednesday and is scheduled to begin accepting new export containers next week.
With the additional crisis largely averted, no major lull and surge should be expected at destination ports – a good thing for US ports already sagging beneath the peak season onslaught. The ports of LA/Long Beach now have more than 30 ships waiting in the bay, approaching the record set at the start of the year.
The congestion extends well beyond ship backlogs and into rail and trucking as well, with Freightos.com marketplace data showing that average door-to-door ocean transit times in August were at record highs – 15% longer than in May, and 46% longer than a year ago.
Ocean freight rates remain extremely high on surging demand and capacity further restricted by port congestion. Asia-US rates to both coasts are about 4% below their levels two weeks ago, but still 6x their level last year when rates were already climbing. Prices from Asia to North Europe stayed level this week, but at more than $14,000/FEU they are 725% higher than a year ago.
China’s zero tolerance approach to COVID outbreaks is also disrupting the air cargo market. Travel restrictions and quarantine requirements for ground and air crews have resulted in hundreds of cancelled flights or planes leaving half loaded or empty.
As a result of capacity being removed, Freightos.com marketplace data shows air cargo rates from Asia to the US and Europe have climbed from 20% to as much as 40% so far in August, with disruptions expected to keep pushing prices higher.
