Ocean freight rates from Asia appear to be stabilising after pretty much crashing during 2022, does this mean we are returning to the traditional peak and trough market of yesteryear?

Following the outbreak of Covid, Asia ocean freight rates climbed steeply for more than two years. They eventually reached the highest levels the market had ever witnessed, as diminished supply levels struggled to keep up with demand. Trying to get space and equipment, whatever the cost, became the priority over negotiating rates in a seller’s market.

Subsequently, as a global cost of living crisis led to demand levels falling off a cliff, rates then tumbled last year. This is despite carrier’s attempts to manage the situation by constantly taking capacity out of the market through a barrage of blanked sailings.

Where we are now is probably as low as the rates can be, and demand levels are low following the traditional go-slow that follows the two week shutdown during Chinese New Year.

Carrier’s are expecting rates to increase as we approach busier periods. This indicates that the market may be about to return to the peaks and troughs that we all understood, in the world that preceded the pandemic.

Back in the day, the cycle was annual and manageable.

At the turn of the year, demand and supply was fairly even up until Chinese New Year, after which rates would fall due to low demand. Pricing then increased towards the middle of the year in the build up to ‘peak season’. The highest demand and rates were during July to September, with a levelling off period after October’s Golden Week.

What you didn’t see was rates rising or falling tenfold during the year, the fluctuations were much, much, more manageable than what we have witnessed during recent times.

In our view, for what it’s worth, the market looks to be in the process of returning to tradition. While this year may be incremental – a ‘transitional’ period due to the cost of living crisis – we feel that next year will see us return to former market conditions.

Of course, that remains to be seen.

If you have any questions regarding the above, then Westbound are here to help. So, please do not hesitate to contact us.