Same Trade Lane, Different Numbers: Decoding Freight Indices

All right, let's get started talking about this week's read on NIFI rates.

Let me share my screen here.

So pulled up, I have Asia to US West Coast.

Can you talk about where the rates are at right now?

Yeah.

As we can also see here, rates are abating slightly.

It's not that they're dropping.

They're abating slightly going down.

This is the second day consecutive week, which is in line with the conversation we had a week ago.

It appears we are past the apex of the seasonal peak earlier than usual, largely driven by some inventory replenishment.

You can say from that perspective, not really surprising.

What I wanna add a few comments on here is actually in addition to what the NIFI here is showing.

Because if you are looking at the, uh, Shanghai Container Freight Index, or the SCFI that came out on Friday, it actually staged a substantial increase here in Asia

Mm-hmm

... of the West Coast of $700 per forty foot.

And here it's very important to notice that different indices measure different elements of the market.

Other than any of them are right or wrong, they measure different elements.

And what the NIFI measures is the price of cargo physically that has been loaded on board ships.

So you know for a fact these rates are being paid for cargo actually moving.

The SCFI leans more heavily towards quoted freight rates out there, and the quotes might be absolutely true.

These are rates being quoted to shippers in the market.

But that does not necessarily mean cargo will then subsequently get booked on those rates.

And even if cargoes get booked, it doesn't necessarily mean it moves.

If cargo is booked, you're gonna have two situations.

The shipper could renege on the booking and simply book at a lower rate to somebody else, or the carrier might roll the cargo and decide, "I'm not gonna accept your booking." So these are measuring two different things.