US West Coast port deal eases strike tensions as SCFI and FBX indices follow WCI

The closure of the past week saw two strings of activities on either side of the globe. The US West Coast Port union strike looms were dissipated to a great extent following intervention from the US authorities, despite hold-up of cargo worth US$5.2 billion and trucks in piles at ports.

Ports, such as Seattle, displayed 10-day congestion at the port even as ports, such as Los Angeles and Long Beach, saw some ease-off. On the other end, in China, the People's Bank of China reduced the rate on one-year medium-term lending facility (MLF) loans, totalling 237 billion Chinese yuan (US$33 billion), by 10 basis points.

The rate cut, its first in 10 months was done on the expectations to re-induce some demand in the economy and ease factory deflation to an extent. Whether the extent of these played into rates and the global freight market and how they will play remains to be seen.

However, the Shanghai Containerized Freight Index (SCFI) on its latest quote as of 16-June 2023, followed the Drewry World Container Index to take a nearly 5% dip to end at 933, while the long-term counterpart in the China Containerized Freight Index (CCFI) momentarily snapped its losing streak to end the weak about 0.6% higher at 926.63.

The Freightos Baltic Index (FBX) which has been underperforming, continued its streak to fall below US$1,400 to end at US$1,399 ending lower by 3%. The downside for the week was led primarily by Europe- South America West Coast rates which broke its rangebound trade to end at US$3,475- a surprising 14% drop. It has to be noted that the trade lane rate (as per Freightos) was always north of US$4,000 over the last two years.

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