March 27, 2024 Update

Weekly highlights

Ocean rates – Freightos Baltic Index

• Asia-US West Coast prices (FBX01 Weekly) fell 12% to $3,728/FEU.
• Asia-US East Coast prices(FBX03 Weekly) fell 10% to $5,284/FEU.
• Asia-N. Europe prices(FBX11 Weekly)  fell 18% to $3,189/FEU.
• Asia-Mediterranean prices(FBX13 Weekly) increased 9% to $4,532/FEU.

Air rates – Freightos Air Index

• China – N. America weekly prices decreased 5% to $5.65/kg.
• China – N. Europe weekly prices fell 10% to $3.52/kg. 
• N. Europe – N. America weekly prices fell 4% to $2.06/kg.

Analysis

The 10,000 TEU container vessel Dali, operated as part of the Maersk/MSC 2M alliance on its Asia – US East Coast TP12/Empire service was on its way out of the Port of Baltimore and heading to Colombo, Sri Lanka when it may have suffered a loss of propulsion causing it to collide with a support of the Key Bridge early Tuesday, leading to the bridge’s collapse and several casualties. 

The Port of Baltimore handles more roll-on/roll-off volumes than any other US port, including a large share of farm equipment exports – and is likely to have an impact on vehicle transport –  but is less critical in terms of container traffic. According to Vespucci Maritime, the port handled 1.1 million TEU in 2023, which would place it outside the top ten largest N. American container ports, and would represent less than 5% of total US ocean imports last year.

Shippers that normally rely on the Port of Baltimore will face the challenge of urgently finding alternatives and will also likely incur higher costs for arrangements farther away from their desired hub. In the short term, there may also be some regional impact as the network adjusts to a shift of volumes to other ports.

With most of Baltimore’s port terminals including its container terminals behind the collapsed bridge, containerized exports at or planning to depart from Baltimore will either need to wait until the waterway re-opens – though no timeline has been announced yet – or be rerouted by truck or rail to alternate ports in the region, likely the more major hubs like Norfolk or New York/New Jersey. Exporters choosing these options could face increased trucking and rail rates as demand increases for shifts to other ports. 

Imports on vessels with scheduled Baltimore port calls will be diverted to other ports while the closure continues. Many of these vessels – including the Dali – already make multiple East Coast calls, and so will offload Baltimore volumes at those other stops. 

More vessels arriving at alternative ports, or longer port calls as vessels offload more containers could cause some congestion at those ports, meaning delays for shippers. But ocean freight is now in its slow season between Lunar New Year and peak season that typically starts in June or July. And at the moment there is no significant congestion at any of the major East Coast ports. So – though there could be some disruptions in the near term as the market adjusts – Baltimore’s volumes should be able to be shifted to other ports without causing too much of a disruption. 

Some pull forward of peak season volumes in the coming months out of concern of possible labor disruptions at East Coast ports in Q3 could see imports stronger than they normally would be, though East Coast ports are expected to be able to handle these volumes nonetheless.  There may also be some shift to the West Coast for shippers concerned about possible disruptions from the Baltimore shutdown and from the threat of a strike later in the year, but, likewise, West Coast ports should be able to handle some increase in volumes.

If some East Coast congestion develops, it could put some upward, likely temporary, pressure on Asia – US East Coast and transatlantic freight rates. Asia – US East Coast rates are already elevated – they are more than double their level in March 2019 – due to diversions away from the Red Sea, but have fallen 22% to $5,284/FEU from their peak in February as demand has eased and carriers have made adjustments for the longer voyages. Transatlantic rates are about even with 2019 levels at $1,659/FEU.