As tensions in the Red Sea heat up, with more container ships avoiding the Red Sea-Suez Canal route and detouring around the Cape of Good Hope, shippers are scrambling to place orders in advance to mitigate the impact of longer transit times from Asia to Europe.
However, due to delays in the return voyage, the supply of empty container equipment in Asia is extremely tight, and shipping companies are limited to large-volume “VIP contracts” or shippers willing to pay high freight rates.
Even so, there is still no guarantee that all containers delivered to the terminal can be shipped before the Chinese New Year on February 10, because the main reason is that carriers will give priority to spot goods with higher freight rates and extend contracts with lower prices. deal with.
On the 12th local time, the US Consumer News and Business Channel reported that the longer the current tensions in the Red Sea last, the greater the impact will be on global shipping, and shipping costs will become higher and higher. Rising tensions in the Red Sea are having a knock-on effect, pushing up global shipping prices.
According to the report, according to statistics, affected by the situation in the Red Sea, container freight rates on some Asia-Europe routes have recently surged by nearly 600%. At the same time, to make up for the impact of the suspension of the Red Sea route, many shipping companies are shifting their ships on other routes to Asia-Europe and Asia-Mediterranean routes, which in turn has pushed up shipping costs on other routes.
According to reports on the Loadstar website, the price of shipping space on the China-North Europe route in February was staggeringly high, with the freight rate per 40-foot container exceeding US$10,000.
Nonetheless, Peter Sand, chief analyst at Xeneta, believes that in the current environment, shippers should not rely too much on low freight rates until supply chain disruptions are resolved.
Peter Sand emphasized: “Shippers are informed that long-term contract rates will no longer be honored and will instead be pushed to the spot market. Therefore, shippers cannot just expect to pay lower rates as shipping lines will be more inclined to prioritize Contracts concluded in the spot market at higher freight rates.”
Meanwhile, the container spot index, which reflects average short-term freight rates, continues to soar.
This week’s data from Drewry’s World Container Freight Composite Index (WCI) shows that the freight rate on the Shanghai to Northern Europe route has further increased by 23% to US$4,406/FEU, an increase of 164% since December 21, while the spot freight rate from Shanghai to the Mediterranean has increased by 25%. % to $5,213/FEU, an increase of 166%
In addition, shortages of empty container equipment and drought draft restrictions in the Panama Canal have also pushed up trans-Pacific shipping rates. Since the end of December last year, Asia-US West Coast rates have risen by about a third to about $2,800 per 40 feet. . Since December, the average Asia-US East freight rate has increased 36% to about $4,200 per 40 feet.
However, if shipping companies’ rates meet expectations, these spot rates will appear relatively cheap in a few weeks. Some transpacific shipping lines will introduce new FAK rates, effective from January 15th. Freight charges for a 40-foot container on the U.S. West Coast will be $5,000, while freight charges for a 40-foot container on the East Coast and Gulf Coast ports will be $7,000.
As tensions continue to rise in the Red Sea, Maersk has warned that disruptions to shipping in the Red Sea could last for months. As the world’s largest liner operator, Mediterranean Shipping Company (MSC) has announced that it will increase freight rates in late January starting from the 15th. The industry predicts that trans-Pacific freight rates may reach a new high since early 2022.
Mediterranean Shipping Company (MSC) has announced new freight rates for the second half of January. Starting from the 15th, the freight rate for the US West route will rise to US$5,000, the US East route will rise to US$6,900, and the Gulf of Mexico route will rise to US$7,300. In addition, France’s CMA CGM has also announced that starting from the 15th, the freight rate for 20-foot containers shipped to Western Mediterranean ports will increase to US$3,500, while the freight rate for 40-foot containers will rise to US$6,000.
This is why, in early January, we suggested that customers place orders for dehydrated garlic granules destined for the United States, which were supposed to be placed in late January, but the order was quickly referred to January as an inquiry. Time is money, saving money is making money.
Kuehne + Nagel analysis data shows that as of the 12th, the number of confirmed container ships to be diverted due to the situation in the Red Sea was 388, with an estimated total transport capacity of 5.13 million TEUs. 41 ships have arrived at the first port of destination after rerouting. Logistics data analysis agency Project44 also pointed out that the daily ship traffic in the Suez Canal has dropped sharply by 61% from before the Houthi armed attack to an average of 5.8 ships.
Post time: Jan-15-2024