MTS Insights

ADP estimates that US private employers added an average of 39,250 jobs per week in the four weeks to April 11th, slightly lower than the pace of 40,250 per week in the four weeks to April 4th.

• The ADP Pulse weekly print maintains a strong pace in the first full week of April, with US private employers adding an avg of 39,250 jobs per week in the four weeks to April 11th.
• However, the interesting part of this week's update is a large downward revision of the four-week average through April 4th, down from 54,750 to 40,250 (though this is still a relatively strong growth rate).
• The bottom line is that the ADP data continues to signal that the labor market is strong and hiring demand has recovered from late 2025 weakness.

Analysis

Increased fuel costs from the Strait of Hormuz closure continues to keep container rates elevated during the post-Lunar New Year, pre-peak season, low demand season for ocean freight when prices normally reach their floor for the year.

Even with this pressure however, rates are well below spikes caused by recent disruptions like the Red Sea crisis and trade war frontloading.

Asia - Europe rates eased 3% last week to both N. Europe and the Mediterranean. Though prices on both lanes climbed by several hundred dollars in the first weeks of the war, N. Europe rates of $2,668/FEU are just 8% higher than before the war and Mediterranean prices at $3,527/FEU are 3% lower than in late February. Maersk recently cancelled an upcoming Asia - Europe GRI, and carriers have started to announce more blanked sailings.

War-related rate increase attempts have not succeeded in keeping prices on these lanes much above their pre-war baselines, but upward pressure from the conflict is likely keeping rates higher than they otherwise would be. Asia - Europe rates are more than 15% higher year on year for both lanes, and more than 50% above rate levels in October, the other most recent low-demand period.

On the transpacific carriers have had more success steadily pushing rates up and preventing backsliding since late February. Prices ticked up slightly for both coasts last week, with West Coast rates of $2,675/FEU up 45% compared to the start of the war and almost 90% higher than post-peak season levels back in October. East Coast prices at just below $4,000/FEU are 30% higher compared to just before the war, and 30% above the previous low-demand stretch in October.

Nonetheless, even with these increases, the low demand and high capacity environment – and possibly the moderate easing of oil and bunker rates compared to earlier highs since the start of the war in Iran – has not allowed rates to rise to the full announced GRI or various surcharge levels.

The next significant rate increase across these lanes could come with the start of peak season in June or July, though some observers warn that war-related rising costs for consumers could dampen shipper expectations and depress peak season volumes.

Containers continue to move to and from the Gulf states via the alternative routes developed since the Strait of Hormuz closure. But even with significantly lower volumes booked, the network is straining, with Maersk reporting that Gulf export containers are facing particular challenges. Even as import containers also face delays and high costs, Gemini is increasing capacity to Saudi Arabia’s Jeddah Port.

In air cargo, more carriers have recently announced jet fuel cost-driven flight cancellations. In addition to Lufthansa scrapping its domestic Europe short-haul CityLine service – eliminating 20k flights through October – KLM will cancel some domestic flights, though both carriers say the cancellations represent a very small share of their overall network. United Airlines is rolling out a market disruption fee for cargo bookings.

Jet fuel supply is already getting tight in Southeast Asia, with K+N reporting it is adding fueling stops in China where supply is so far unconstrained before transiting to SEA countries. European Union officials recently met to discuss the looming prospect of jet fuel shortages, and may be considering a jet fuel sharing plan if supply gets really tight.

Despite these cancellations though, overall global air cargo capacity that had dropped sharply in March may now be at only a single digit deficit compared to before the war as Middle East carriers continue to rebound. Other global carriers have also shifted capacity to follow the war-driven shift in volumes to alternative Asia - Europe and other lanes.

These capacity additions, as well as moderate recent decreases in jet fuel prices may be contributing to the continued leveling off of rates on major lanes. The Freightos Air Index global benchmark remains 30% higher than before the war and year-on-year, but has been about level since the start of the month.

China - Europe rates at $5.07/kg and China - N. America prices of $6.40/kg both dipped slightly last week, with S. Asia - Europe rates also down 1% to $4.94/kg. SEA - Europe rates meanwhile climbed 9% to $5.24/kg, though remain a little below its year high of $5.30/kg hit earlier this month.