What the Red Sea conflict means for domestic transportation

Chart of the Week: Freightos Baltic Daily Index – China to North American west and east coasts, Panama Spread SONAR: FBXD.CNAW, FBXD.CNAE, FBXD.PANA

Disproportionate shipping rate increases resulting from the Red Sea attacks further incentivize shippers to bring freight into the U.S. West Coast from Asia, as a pandemic-era pattern of shipping to Eastern ports continues to unwind.

Spot rates for 40-foot equivalent containers moving on the ocean from China to North America’s east and west coasts spiked, according to the Freightos Baltic Exchange indices, to start the year. The conflict in the Middle East is now impacting nearly all global shipping lanes. Inbound east coast rates increased more than those to the west, increasing the “Panama Spread” back over $1,100.

The Panama Spread measures the difference between maritime container shipping rates from China to the North American east and west coasts. More positive figures indicate a stronger monetary incentive to ship to the west coast.

The ongoing drought in Central America has restricted the flow of freight moving through the Panama Canal and has increased transit times.

Source: freightwaves.com