Record Arbitrage, No Clear Direction, and NYFI Options Go Live

Yeah, I think we should start off having a look at Asia and North Europe to start with and see where we are on those ones.

Just as a reminder to everyone, we're now in the first week of October, which is Golden Week, so that's the traditional week of holiday out in China that usually also marks the end of the peak season.

But as we have already discussed multiple times here on the podcast, the peak in Asia-Europe did not happen in the weeks leading up to Golden Week this year.

It happened much earlier, way back in July.

And basically, this goes like clockwork.

With a slight hiccup, of course, as you can see, but apart from that, the pace of decline has been phenomenally steady here over the last two, two and a half months, and simply continued into this week as well.

The only question that's really relevant here is to start asking is, okay, how long will this decline then continue, and when would we see a rebound? And maybe to get an indication at least of where some of the market participants' thoughts are, we could also look at how the futures indications are right now for Asia and North Europe.

And the indication is basically also in line with what one could seasonally expect.

The expectation is to hit a bottom here during October, maybe into the beginning of November, and then we have the second seasonal peak that we always have leading up to Chinese New Year.

Chinese New Year next year is in the beginning of February.

The only change compared to last week is apparently some of the participants are becoming slightly more bullish in terms of how high this pre-Chinese New Year peak is potentially going to be.

But overall, Asia-North Europe continues to present a very normal seasonal case in terms of ups and downs.

We discussed it last week around the congestion and the restriction on capacity that was happening.

So I think with that news coming out last week, it's expected that we see maybe people pricing in a slightly stronger peak than the previous one.

That is true, but this is where the Pacific, if we shift over to the Asia-US West Coast part, i- in my view, presents data that s- shows that this might not be as simple as what everybody thinks.

First of all, we now have the continued increase in Asia-US West Coast rates.

If we were to go back to more normal times, and here I'm talking not just the last couple of years, I'm talking way before the pandemic.

If you analyze data that were available before the pandemic, what you would usually see, both on Asia-North Europe and on Pacific, is that rates would peak first and second week of September.

And then they would start to abate already from there.

This continues to increase.

And yes, as you point out, the, there is this narrative out in Asia that this is down to port congestion.

This is why there's a lack of capacity.

But I'm not quite sure that is all of the explanation because if you think it through, if this was really port congestion and vessels couldn't get in, you couldn't handle the containers, why is this only impacting the Pacific? Why do we see continued declines then on rates on Asia-Europe? They should be equally impacted.

They are not.

If you look at the arbitrage right now between Asia-North Europe and Pacific, it is record high.