Key insights:

1. Middle East crude exports are approaching pre-war levels via the Strait of Hormuz and alternatives according to some estimates, with prices easing moderately; bunker costs remain roughly flat for now though, as increased crude volumes may take time to translate into lower refined product prices.

2. Saudi crude flows via the southern Red Sea are contributing to the recovery, with Saudi-backed forces attempting to recapture Houthi-seized positions on the Bab el-Mandeb; despite these ongoing tensions, the Premier Alliance – the last major holdout – has announced some services will resume Red Sea transits this month.

3. Asia-Europe rates slipped 2-3% last week to $3,260/FEU to N. Europe and $3,555/FEU to the Mediterranean, with Med prices back to pre-peak season levels even with Far East congestion still a factor. The sharper decline on Mediterranean lanes may reflect the sharper rebound in Red Sea transits compared to N. Europe lanes.

4. Transpacific rates eased 3% to $8,322/FEU on the West Coast while East Coast held at $9,600/FEU; Golden Week blanked sailings may help keep prices stable near term, and nearly three months of weather-related Far East port disruptions continue to absorb capacity and could keep the transpacific rate floor elevated even into the post-peak, pre-LNY demand lull.

5. Air cargo rates cooled over Golden Week, with Far East/China-N. America down more than 15% to $5.60/kg and Far East/China-Europe easing 7% to $3.83/kg/

Ocean rates - Freightos Baltic Index:

• Asia-US West Coast prices (FBX01 Weekly) decreased 1% to $8,322/FEU.

• Asia-US East Coast prices (FBX03 Weekly) stayed level at $9,606/FEU.

• Asia-N. Europe prices (FBX11 Weekly) decreased 3% to $3,260/FEU.

• Asia-Mediterranean prices (FBX13 Weekly) decreased 2% to $3,555/FEU.

Air rates - Freightos Air index:

• China - N. America weekly prices decreased 18% to $5.60/kg.

• China - N. Europe weekly prices decreased 7% to $3.83/kg.

• N. Europe - N. America weekly prices increased 1% to $2.14/kg.

Analysis

Some recent estimations have Middle East crude oil exports – via the Strait of Hormuz and alternatives – approaching pre-war levels, with crude prices easing moderately. For now though, bunker prices remain about level with the last few weeks, as increased crude volumes, if sustained, may take time to translate into lower prices for refined products.

Increased Saudi crude flows via the southern Red Sea account for part of this volume recovery, with Saudi-backed forces attempting to recapture areas on the Yemeni coast of the Bab el Mandeb Strait recently seized by the Houthis. Even with elevated tension in the region container carriers continue to gradually increase Red Sea traffic, with the Premier Alliance – the last holdout among the three alliances and MSC – announcing some services will resume Red Sea transits this month.

The increase in effective capacity from more vessels taking the shorter route is likely one contributor to container rates sliding since mid-July on Asia - Europe lanes. Prices dipped 2-3% last week to $3,260/FEU to N. Europe and $3,555/FEU to the Mediterranean, with rates level so far this week over the Golden Week holiday as carriers have blanked sailings during this low demand stretch.

The sharper increase in Red Sea sailings for Asia - Mediterranean services, as well as continued challenges with congestion at some N. Europe hubs for Asia - N. Europe volumes, may explain why rates to the Mediterranean – even as Far East congestion, though improving, continues to tie up capacity – have slid back to pre-peak season levels. Asia - N. Europe prices meanwhile, remain about $400/FEU higher than back in mid-May.

Transpacific container rates decreased 3% to the West Coast last week to $8,322/FEU while East Coast prices were level at $9,600/FEU. Increased blanked sailing over the Golden Week period may help keep prices stable in the near term. Increases in blanked sailings as well as backlogs from nearly three months of weather-related disruptions at major ports in China may keep the transpacific rate floor quite elevated even as we enter what is normally a couple months of low demand post-peak season and pre-Lunar New Year rush.

In air cargo, more recent analyses confirm data center components are a significant driver of global demand growth even as e-commerce volumes – though still significant – contract in some major markets. The Freightos Air Index shows Far East/China rates cooling more than 15% to N. America last week to $5.60/kg and easing 7% to Europe to $3.83/kg as demand eases over Golden Week.