Industry Pulse: Ocean freight rates tumble at end of 2017
Editor's Note: This story is part of a weekly analysis of the logistics industry's latest statistics. See an overview in our data hub.
- Ocean freight rates from China to both U.S. coasts continued to fall at the end of last year, according to data from the Freightos International Freight Index (FIFI).
- Rates from China to the west coast dropped dramatically between November and December 2017, falling more than 23%. In addition, rates last month were down 31.3% compared to the same period in the previous year.
- On both coasts, ocean freight rates reached their lowest level of the year the week of Dec. 12, 2017.
A rate slump at the end of the year also occurred in 2016. The difference between the two years is the months leading up to December. In 2016, rates increased steadily from September before dropping at the end of the year. In 2017, rates fell steadily throughout the year and continued that trend into December.
Although ocean freight rates fell continuously over the course of 2017, the downward spiral hasn't continued into the new year. This first week of January, rates increased 31.5% from the previous week on the west coast, and 26.8% on the east coast.
A beginning of the year spike isn't unexpected for ocean freight rates. Between December 2016 to January 2017, rates increased by 34.4% on the west coast and 17.3% on the east coast.
Laws of economics may suggest rates are down because demand is down, but that's not necessarily the case. Although loaded imports on the east coast were slightly lower in November 2017 compared to October, imports rose to west coast ports.
The year ahead will be one to watch, to see if rates follow a similar trend of falling into a slump at the end of the year — or perhaps ocean freight rates will surprise us.
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