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Freightos: Supply chain is starting to recuperate

A spike in intra-Asia air cargo rates is an indication that China’s manufacturing industry is ramping up its businesses again following the extended Lunar New Year break caused by the Covid-19 pandemic.

Eytan Buchman, CMO at Freightos, said that Chinese manufacturers are restocking their factories with key components using airfreight.

“With production picking up and passenger flights and their cargo space still severely limited, air cargo rates out of China to Europe and North America have also started to climb,” said Buchman.

He went on to say that ocean rates from China were largely unchanged this week at US$1,323 for a transpacific FEU to the US West Coast, “which is still 7% lower than this time last year.”

Stagnant rates will not last, however, said Freightos, “As production recovers, a spike in prices becomes more likely – and carriers are getting ready for this rebound. This week’s sharp drop in blank sailings is a good indication of this preparation. “

In addition, lines are rapidly repositioning empty containers in expectation that there will be growing demand as the recovery out of China takes hold and for Europe that means that backhaul rates have soared.

“Though backhaul rates for US-China have been stable, FBX rates for North Europe-Asia have jumped 48% in the last two weeks, as exporters compete to get their shipments on limited numbers of ships,” said Buchman.

Carriers are readying their services for a possible surge in cargo in late April and that surge fulfilling late orders could clash with the return to school rush.

However, there is one note of caution from Freightos that as the virus spreads there could be new disruptions, such as the US ban on inbound flights from the EU. “And the industry not only has to worry about the supply of goods coming out of China, but also about possible drops in the demand for those goods in the countries just starting to cope with the epidemic.”

Below are the latest China-US container rates, which are heavily impacted by production’s slow recovery:

  • China-US West Coast prices (FBX01 Daily) fell by 1% since last week to $1323/FEU. Rates are 10% behind last year’s prices for this week.
  • China-US East Coast prices (FBX03 Daily)  are unchanged at $2541/FEU. This rate trails last year’s by 2%.

Nick Savvides
Managing Editor





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