Jaguar Freight | Rate Check

In this week’s Roar: Global trade remains robust, the U.S.-Asia trade war, diesel prices are up and so are global air freight rates, and how far global CEOs will go to mitigate risk.

So far this year, global trade has remained surprisingly robust, especially from China. But shipping lines and ports still face challenges as empty containers pile up in the U.S. and Europe. The East-West trade imbalance is worsening, driving port congestion that hinders efficiency and burdens carriers with zero-revenue empty container backhauls. This cost could be reflected in rates soon if things do not change.

Despite other positive economic news regarding consumer demand, U.S. container imports from 10 of the biggest Asian economies fell 5.3% year-on-year in July, with Chinese exports to the U.S. dropping 7.8% to 944,270 TEUs. Meanwhile, Vietnam’s exports to the US grew 8.2%, pointing to a shift away from Chinese sourcing amid current trade tensions.

Unsurprisingly, fuel costs remain volatile. The U.S. national average for diesel prices rose to $5.454 per gallon during the week of August 17, its highest mark since May, after an increase of 19.7 cents. Prices are up $1.741 year-on-year, driven by ongoing geopolitical tensions.

Global air freight rates rose 0.2% during the week of August 17. They’re now flying 19.2% higher year-on-year, mostly driven by soaring jet fuel prices and Persian Gulf tensions. It’s not just on imports, either. As one example, outbound Chicago rates jumped 3% week on week, up 53.9% over last year.

A recent survey of more than 500 global CEOs found that more than 80% of U.S.-based CEOs said up to 20% of their revenue would be at risk if their top three suppliers were disrupted for two weeks. To mitigate that risk, they said they would accept an average 17% increase in third-party supplier costs to guarantee greater supply-chain resilience, with 70% willing to accept increases of 11% or more. Geopolitics, emerging technologies, sustainability and regulatory requirements, and cybersecurity were among the leading supply chain concerns cited.

For the rest of the week’s top shipping news, click here.

Compliments of Jaguar Freight – a member of the EACCNY