Dive Brief:
- Ocean spot rates from Asia to North America are declining as seasonal demand eases, Judah Levine, head of research at Freightos, told Supply Chain Dive in an email.
- During the week of Jan. 28, rates per forty-foot equivalent unit from Asia to the U.S. West Coast fell 7% week over week, meanwhile prices from Asia to the East Coast declined 1% week over week, according to a Freightos weekly update.
- Spot rates did surge at the start of January as shippers rushed to move goods ahead of the Lunar Holiday period, Levine said. Rates increased nearly $6,000 per FEU from mid-December to mid-January but have since dropped to about $5,000 per FEU, he added.
Dive Insight:
Rates are expected to rise after Lunar New Year celebrations wrap up, depending on the backlog built over the holiday period, Levine said.
Source: Freightos
Lunar New Year runs from Jan. 29 until Feb. 4 this year, although the exact start varies by country. Before the holiday, shippers tend to move goods early due to factory closures that occur overseas during that time, Joe Kronenberger, SVP of air freight product at Geodis, told Supply Chain Dive last week. Some manufacturers in China shut down operations up to six days before the holiday and resume production up to 10 days after the holiday week ends.
Even without a backlog, shippers remain concerned about ongoing geopolitical shifts.
Transpacific rates have generally declined in January, but prices remain doubled compared to 2019 levels as Red Sea diversions continue to absorb market capacity, Levine said.
There is hope the ocean market will stabilize with the recent Israel and Hamas ceasefire, but carriers have not returned to the Red Sea just yet.
Maersk said in a Jan, 24 update it will continue to sail around Africa via the Cape of Good Hope until it considers it safe to transit the Red Sea. CMA CGM also said it would continue to prioritize alternative routes.
Meanwhile, tariffs continue to be a concern for shippers. President Donald Trump. President Donald Trump said last week he plans to pose a 10% tariff on China-based imports as soon as Feb. 1. As a result, shippers continue to frontload cargo to mitigate potential disruptions, experts noted.
“The anticipation of Trump administration tariff hikes will cause continued frontloading until tariffs are rolled out, which will also keep demand higher than it otherwise would be in Q1 and possibly into Q2,” Levine said. In turn, higher demand may push up rates.
Uncertainty remains about which countries will be tariffed and when additional tariffs will be placed, but companies remain ready, Brian Bourke, global chief commercial officer at Seko Logistics, told Supply Chain Dive in an interview.
"I think companies think there's a general understanding by beginning of February, you know, we're going to know more," Bourke said.
Companies have already reacted to tariff concerns by diversifying their supply chains and frontloading cargo. There will be more of a reaction from shippers after more tariff details are revealed, Bourke said.
Editor's note: This story has been updated to include the most recent rates Freightos published on Jan. 28.
