Fate of the air cargo market 'largely in the hands of US consumers'
The US consumer will largely determine the success of the airfreight industry in the coming ...
The North Europe component of the Freightos Baltic Index (FBX) unexpectedly jumped 9% today.
This propelled the container spot rate back over $10,000, to $10,494 per 40ft – but the spike is being seen as a temporary blip, given that other indices and market fundamentals are all heading in the reverse direction.
Indeed, Xeneta’s XSI North Europe reading fell a further 4.5% this week, to $9,557 per 40ft, while Drewry’s WCI component fell 2%, to $8,939 per 40ft.
Moreover, today’s Ningbo Containerized Freight Index (NCFI) commentary said the European market “remained oversupplied” and that freight rates “continued to decline”.
“Carriers are definitely beginning to struggle to fill their ships for North Europe and are sailing light,” one China-based NVOCC told The Loadstar this week.
And Maersk CEO Soren Skou admitted this week that European consumer confidence was “as low as it has ever been”, which he said would have an impact on bookings.
This was confirmed by a carrier contact who complained that the distant slack season had already begun.
“The peak season for North Europe, has passed us by, it’s been and gone,” he said. “Now we are into a very early slack season, by the looks of the dismal forward-booking prospects,” he told The Loadstar.
Meanwhile, on the transpacific, there is optimism that the US consumer’s appetite for goods will keep load factors at a continued healthy level. Mr Skou was certainly more optimistic about the US market than Europe, during his Q2 earnings call presentation this week.
“We should always be careful not to count out the US consumer,” he said.
In response to a question from an analyst, relating to the stories coming from the US of retailers building too much inventory, Mr Skou said the feedback Maersk was getting was that customers were complaining “they have the wrong inventory” and they were still fulfilling orders for “the right inventory”.
He said there was “still very strong demand” for some retail and lifestyle goods, “and we see our customers being very busy in terms of imports to the US”.
Nevertheless, spot rates from Asia to the US west coast are continuing to decline; for example, the XSI recorded an 8% drop this week, to $6,353 per 40ft, representing a fall of some 60% on the short-term market rates of a year ago.
Rates for the east coast appear more stable and, with port congestion a factor, the WCI edged down just slightly, to $9,774 per 40ft.
On the transatlantic, meanwhile, there are signs of some rate relief for shippers, after capacity restrictions and strong demand have seen rates leap more than 400% in the past two years, the FBX shedding 7.5% on the week, to $7,784 per 40ft.
Spot rates continue to fall on most trades out of China, with the NCFI showing declines this week on all but one of the 21 routes it tracks.