Are Freight Rates Dropping? Analyzing Global Shipping Trends in 2024

Introduction

As we navigate through 2024, the global shipping industry continues to experience significant fluctuations in freight rates. At FreightAmigo, we understand the importance of staying informed about these trends to help our clients make informed decisions. In this comprehensive analysis, we'll explore the current state of freight rates across various shipping routes and modes, focusing on the question: Are freight rates dropping?

Recent data from August 2024 reveals a complex picture of the global freight market, with some routes experiencing rate decreases while others see increases. Let's dive into the details and examine the factors influencing these trends.

Ocean Freight: A Mixed Bag of Trends

Transpacific Eastbound (TPEB) Routes

The Transpacific trade lane has been experiencing strong volumes, surpassing last year's figures. However, the situation is not uniform across all destinations:

• U.S. East Coast: Rates are facing downward pressure due to increased capacity from extra loaders.
• U.S. West Coast: Less space pressure, particularly for Pacific Southwest ports from China's main ports.

Shipping lines have begun reducing rates for both East and West Coast routes to balance supply and demand. However, they're also introducing early General Rate Increase (GRI) announcements for August to stabilize rates.

Far East Westbound (FEWB) Routes

The Asia-Europe trade is experiencing its own set of challenges:

• Demand remains strong, with floating rates at the higher end.
• The Shanghai Containerized Freight Index (SCFI) has shown a slight decrease over the past two weeks.
• Blank sailings are expected to keep the floating market critical.

Long-term named account space is limited, and carriers are restricting it for space and equipment priority. This situation suggests that while there might be some rate relief, it's not a significant drop across the board.

Transatlantic Westbound (TAWB) Routes

The situation in Europe presents a mixed picture:

• North Europe: Carriers are noticing reduced capacity effects due to full vessels. Some rate increases are planned for September.
• Mediterranean: Rates have already increased for August, with no news about further increases in September.

The usual slack season in August is expected to start showing signs in the coming weeks, which could potentially lead to some rate relief.

Air Freight: Rates on the Rise

Contrary to some ocean freight trends, air cargo rates are showing an upward trajectory:

• Global air cargo rates rose by 2% in the third week of July 2024, reaching $2.56 per kilo.
• This rate is 14% higher than the same week last year and 47% higher than pre-COVID levels in July 2019.
• Asia-Pacific origins saw a 2% increase in spot rates, reaching $3.34 per kilo – a 25% increase compared to last year.

These increases are occurring despite declining tonnages, suggesting strong demand for air freight services.

Regional Highlights

Indian Subcontinent to North America

This route is experiencing significant challenges:

• Rates continue to increase due to capacity constraints.
• Structural and unexpected blank sailings, increased transit times, and rising demand have caused freight rates to surge.
• Large rollover pools are adding stress to upcoming sailings.

However, new services like the India America Express (INDAMEX) are expected to bring some relief, potentially easing the upward pressure on rates.

Middle East and South Asia (MESA) to Europe

This route has seen substantial rate increases:

• Average spot rates from MESA to Europe were $3.30 per kilo in week 29 – more than double (+126%) their levels last year.
• Significant increases were observed from Bangladesh (+178%), India (+161%), and Sri Lanka (+78%).

Factors Influencing Freight Rates

Several key factors are contributing to the current freight rate landscape:

1. Port Congestion: While improving in some areas, congestion continues to impact rates and transit times.
2. Blank Sailings: Scheduled cancellations of voyages are affecting capacity and rates.
3. Weather Conditions: Bad weather around the Cape of Good Hope is causing delays and capacity challenges.
4. Equipment Shortages: While improving, some areas still face shortages of certain container types.
5. Labor Strikes: On-and-off strikes in European countries are impacting terminal operations and last-mile deliveries.
6. Geopolitical Issues: Political protests in countries like Bangladesh are creating backlogs and affecting regional shipping dynamics.

How FreightAmigo Can Help Navigate These Challenges

In these complex and rapidly changing market conditions, FreightAmigo's digital logistics platform offers several advantages:

1. Real-time Rate Comparisons: Our platform allows you to compare door-to-door freight quotes across multiple modes, helping you find the most cost-effective options in this fluctuating market.
2. Shipment Tracking: With connections to over 1000 reputable airlines and shipping lines, we provide real-time tracking, crucial in a market where delays and rerouting are common.
3. Custom Clearance and Insurance: Our one-stop solution for customs clearance and cargo insurance helps mitigate risks associated with port congestions and potential delays.
4. Automated Documentation: In a market where ERDs and documentation requirements are constantly changing, our automated shipment document system helps ensure compliance and reduces errors.
5. Expert Support: Our 24/7 logistics expert support can provide guidance on navigating complex situations like blank sailings, equipment shortages, and route changes.

Conclusion

While some ocean freight rates are showing signs of stabilization or slight decreases, particularly on certain routes, the overall picture remains complex. Air freight rates are generally on the rise, and many factors continue to exert upward pressure on shipping costs across various modes and routes.

As we move through 2024, it's clear that the global shipping landscape remains dynamic and challenging. Shippers need to stay informed and agile, ready to adapt their strategies as market conditions evolve. At FreightAmigo, we're committed to providing the tools, information, and support needed to navigate these complex waters successfully.

For the most up-to-date rates and personalized shipping solutions, we encourage you to reach out to our team. Let us help you optimize your logistics strategy in this ever-changing environment.