Ocean freight rates on two major China trade lanes have moved in opposite directions over the past two months, and the split is wide enough that it can't be explained by shifts in cargo demand alone. Shippers moving goods from China to the U.S. West Coast are now paying far more than those shipping to the Mediterranean, a reversal from earlier this year.

How Wide Is the Rate Gap?

The Freightos Baltic Daily Index for China to North America West Coast closed at $8,446 per forty-foot container on September 23, roughly double its 12-month average and about four times what shippers paid a year earlier. Over the same period, the China-to-Mediterranean index has fallen to $3,591 per container, down more than half from its July peak and now below where it started the year. In January, a container to a Mediterranean port cost about 1.7 times as much as one to Los Angeles. That relationship has now flipped, with West Coast boxes costing roughly 2.35 times as much as Mediterranean ones.

Booking Data Doesn't Match the Rate Split

A rate gap this wide would normally suggest strong demand for West Coast space and weak demand for Mediterranean space. Booking data tells a different story. Confirmed bookings from major Chinese ports to Mediterranean destinations are up 38% year over year, with most individual lanes showing growth, and bookings have kept rising even after Mediterranean rates started falling in July. Bookings into North Europe are also up sharply year over year. On the West Coast, overall bookings are up around 50% year over year, but that growth is concentrated almost entirely in Long Beach. The typical West Coast lane is up only about 1%, and bookings into Los Angeles and other ports are flat or declining on several routes. In short, Mediterranean demand looks steady to strong even as rates dropped, while West Coast demand looks only modestly higher despite rates quadrupling.

What's Driving the Split

Supply changes appear to be the bigger factor. On the Asia-Europe route, carriers have been shifting more services back through the Suez Canal instead of routing around the Cape of Good Hope, freeing up vessel capacity for Mediterranean and European ports. Suez container traffic is up sharply this year, and carriers are rejecting fewer Mediterranean bookings than a year ago, a sign that space is easier to find. On the trans-Pacific side, congestion linked to typhoons at Chinese ports since mid-July has disrupted schedules, and carriers have responded with a wave of blank sailings. Rising bunker fuel costs, tied partly to tensions around the Strait of Hormuz, add further pressure on longer routings. Industry data shows vessel schedule reliability has declined for three straight months. Even so, carriers are rejecting a smaller share of West Coast bookings than a year ago despite the much higher rates, suggesting space is being rationed through price increases rather than an outright shortage of ships.

What Comes Next

The next stretch to watch is early October, when exporters typically rush cargo out ahead of China's Golden Week factory closures. Analysts expect one more push higher on trans-Pacific rates before that holiday. After Golden Week, rates could ease as congestion clears and some of the capacity carriers have held back returns to the Pacific route.

What This Means for Shippers

For importers moving cargo through West Coast ports, current rates are running well above typical levels, and space is tight enough that carriers are not discounting despite only modest volume growth on most lanes. Booking early and building in buffer time for blank sailings and schedule delays is prudent through the Golden Week period. Shippers using Mediterranean or European gateways are seeing more favorable rates and apparently ample space, even with steady demand, which may make now a reasonable time to shift volume to those lanes if routing flexibility allows. Cargo owners on both trades should track vessel schedules closely, since blank sailings and reduced reliability are affecting transit time predictability more than usual right now.

Sources: freightwaves.com