A large drop in freight rates registered by the Baltic Exchange’s benchmark container index is being attributed to a technical issue. The Freightos Baltic Index (FBX) on Friday reported its largest correction since inception in October 2016. Rates on the FBX01 route from China to the US West Coast dropped $3,410 in one day to $15,827 per 40-foot equivalent unit (feu) on Friday. The fall looked to have continued, with rates from China to the US East Coast marked down $2,379 to $17,584 per feu. But those drops raised eyebrows with shipping sources describing them as out of kilter with rates being quoted to forwarders. Rates being quoted from China to the US are closer to $20,000 per feu, said one container freight source.

The forward freight market points to even higher rates for the next two months. Indicative freight rates for the route from Asia to the US West Coast (USWC) are still priced at $23,000 per feu for August, and $23,500 per feu in September, according to the Baltic Exchange forward assessments for the FBX. “It’s not a massive drop off, just noise,” said a broker of container forward freight agreements. “There’s uncertainty for next few months, but rates haven’t been going down in the eyes of the physical guys.”

Other freight indices point to a stable container freight market in recent days. The World Container Index produced by Drewry registered a small drop of around 3% from Shanghai to Los Angeles last week. But Drewry director Philip Damas added that rates were more likely to increase in the coming months.

The discrepancy between the FBX and the physical market comes after an attempt to refine the index. Last month, the Baltic Exchange said it had received market feedback that FBX01 (Asia-US West Coast) and FBX03 (Asia-US East Coast) “did not accurately reflect the market”. It conducted “a detailed investigation” and “outlier data was identified and excluded from the benchmarks.” Those changes were expected to lead to an upward movement in the index after 28 July — rises which have been reversed by the steep drop of the past two days.

Brokers say the container freight market remains sky high and attributed the fall in the FBX to changes to how premiums on container shipments are calculated. Container freight rates have become increasingly difficult to calculate in recent months as lines pile on additional surcharges. In a statement to TradeWinds, the Baltic confirmed that the extreme market conditions meant the container index “did not correctly reflect the carrier premium fees when reporting prices”.

“Container shipping is facing an unprecedented shortage of capacity and the surcharges or premiums are constantly changing, almost on a daily basis,” the Baltic said. “We are constantly working on the methodology to keep up with these changes in what are extreme market conditions.” The exchange said it is engaging with the market for feedback on the validity of the recent price swings. A spokesperson for Freightos, the calculating agent for the index, said the company was clarifying the situation.