While trans-Pacific rates have returned to pre-COVID levels, trans-Atlantic rates remain elevated and are still more than twice the rates in March 2019. The elevated rates are due to strong U.S. imports from Europe, particularly in building materials.
The Drewry World Container Index (WCI) spot-rate assessment for Rotterdam, Netherlands, to New York was $5,061 per forty-foot equivalent unit in the week ending Thursday. This is down 32% from last year’s peak but still 2.5 times higher than the rates in March 2019. Meanwhile, the Freightos Baltic Daily Index (FBX) put Europe-East Coast spot rates at $3,891 per FEU on Friday, down 54% from 2022 highs but 2.3 times higher than March 2019 levels.
According to data from Norwegian firm Xeneta, short-term trans-Atlantic westbound rates peaked at $8,660 per FEU last June, and current average rates are at $4,131 per FEU. Long-term trans-Atlantic westbound rates peaked at $7,700 per FEU last August and are now down to $3,700 per FEU. The low end of the range is now at $2,874 per FEU, down from $6,950 per FEU in August.
The import data, when analyzed by four-digit Harmonized Tariff Schedule code, shows that building supplies and home furnishings are driving volumes, with four of the top five gainers in 2022 compared to 2019 being related to building supplies and home furnishings. The largest volume gainer was bagged Portland cement and other cement, up 644,737 tons or 101%. The biggest decline was for U.S. imports of European beer, which plunged 329,052 tons or 22% in 2022 versus 2019. However, imports of European spirits and wine more than offset beer losses, up a combined 338,518 tons in 2022 versus 2019.
Despite the elevated rates, the normalization process has begun, with rates primed to continue easing further. While the trans-Atlantic run remains the most lucrative of the major east-west trades, the rate per FEU per mile is much higher than in the other mainline trades, which should increasingly attract more capacity to the trans-Atlantic and bring rates down. However, carriers are not adding capacity fast enough, and it may take more time for the trans-Atlantic to normalize.
