Ocean rates from Asia to Europe and the Mediterranean increased last week, with prices of US$5,300/FEU to Europe approaching levels in the lead-up to the last Lunar New Year (LNY) back in January.
Rates may already be increasing on pre-Lunar New Year demand as Asia-Europe/Mediterranean shippers need to ensure they move sufficient inventory out of Asia
before the holiday slowdown or risk extended waits due to diversions around the Cape of Good Hope for containers that move only after LNY.
Carriers will aim to push rates higher on mid-month GRIs, hoping this trend will only intensify as the late January holiday gets closer.
Transpacific shippers do not face this early, added LNY urgency, so pre-holiday demand may only pick up in a few weeks. Without this added pressure and with the window to move and receive goods from Asia before the increasingly likely ILA port worker strike on 15 January closed, rates eased last week. Carriers will attempt to push prices up with mid-December GRIs aiming for US$1,000 to US$3,000/FEU increases, though rate hikes may only succeed closer to LNY.
But the latest National Retail Federation (NRF) US ocean import report suggests that Q4 frontloading ahead of the January strike deadline and from heightened expectations for tariff increases next year since the Trump victory in November kept volumes and rates stronger than they otherwise would have been during what’s typically slow months for ocean freight.
The NRF’s latest estimations for Q4 import totals are 11% or 640,000 TEUs higher than those released in early October before a new strike horizon was set and before the presidential election. Projections for 2025 volumes through April are 7% higher than in 2024, suggesting that shippers may continue frontloading in early 2025 ahead of the anticipated tariffs.
For both ex-Asia lanes, rates will likely increase as seasonal demand increases before and just after LNY – though capacity increases on both these lanes may challenge how high rates will climb – and then ease later in February. The carrier alliance reshuffle going into effect in February may create a boost of competition and put some additional downward pressure on rates through March as carriers roll out their new services.
In air cargo, rates ex-China remained elevated but level last week even in what’s meant to be one of the busiest weeks of the year, as capacity additions, frontloading and advanced capacity reservations combined to avert peak season chaos. Freightos Air Index Middle East – N. America rates have climbed about 20% since the end of October with prices pushing past US$4/kg last week for the first time this year, possibly reflecting peak season pressure on sea-air volumes as an alternative to direct air transport ex-China this year.
The big driver of elevated rates and tight space out of China throughout 2024 has been the surge of B2C e-commerce volumes to North America and Europe. And though demand for low-cost goods from platforms like Temu and Shein may continue to grow, DSV speculates that the intensifying challenges to the de minimis exemption facilitating cross-border air cargo shipments to consumers may curb the e-commerce air cargo surge in 2025.
This article was written by Judah Levine, Head of Research at Freightos
