Freightos Index update W1 2018 As supply chains crank back into action following the vacation, the January ocean freight GRI (General Rate Increase) stuck, with China-US rates increasing by 27%. While prices may continue to climb slightly until the Chinese New Year, expect them to drop back after February 16. Zvi Schreiber, CEO of Freightos stated “The effective GRI on FCL in January has been about $300 for China-US West Coast, and $500 for China-East Coast, but we believe the lift from this and two more GRIs coming up won’t last. It seems oversupply will keep ocean freight prices low for the foreseeable future, as evidenced by a lackluster peak season. The situation is better for air freight. Increased demand, particularly from increased cross-border e-commerce, is applying an upward pressure on prices. Shippers should factor longer air freight peak seasons and increased air costs hikes into their planning. In some instances, this might tip the balance back toward ocean freight.” Air Freight Pricing Recent snowstorms on the US eastern seaboard and severe storms in Europe have taken a toll. Expect cargo backlogs to return, with rates only dipping a little until mid-January, when the Chinese New Year runup begins. Manel Galindo, CEO of Freightos WebCargo said “In recent years, the pre-Chinese New Year squeeze has pushed air cargo rates up from around US$6-7/kg to around $10-12/kg, but larger backlogs this year might see it going even higher. For large shipments and urgent shipments to get out on time, they will likely be looking at rates around US$15-20/kg.” Ocean Freight Pricing
TRADE LANE THIS WEEK LAST WEEK WOW CHANGE THIS WEEK (2016) YOY CHANGE
China-US West Coast 1462 1150 27.00% 2100 -30.00%
China-US East Coast 2369 1869 27.00% 3084 -23.00%
China-Europe 1625 1600 2.00% 2455 -34.00%
Europe-US East Coast 1420 1127 26.00% 1555 -9.00%
Figure 1: FreightOS INternational Freight Indexes: Major lanes week on week and year on year
  • The January 1 GRI is riding the back-to-work increase in shipments, with an average GRI effect of $300 for China-US West Coast and $500 for China-US East Coast pushing prices up by 27% this week. Space isn’t tight as of yet.
  • However, the GRI has been less effective so far than last year, and prices still lag last year’s rates (30% down for West Coast, 23% down for East Coast).
  • Same goes for China-Europe’s early January price spikes for both years. Although prices jumped a little this week, the year on year comparison deteriorated. Space will tighten closer to CNY, so expect prices to go up again.
  • Europe-US East Coast rates jumped 26% and are now the closest they’ve been since October to last year’s prices.
Figure 2: Even though China-US West Coast prices jumped this week, they are still down on this time last year