The freight rate is not the highest, only higher!
Global container freight rates have skyrocketed!
Affected by the Red Sea crisis, the container shipping industry experienced a major reversal in December, the slowest month in the industry. Not only was it not a dull month, the freight rates on the European lines rose wildly in December, and even caused a container explosion on the European lines.
The latest issue of the Shanghai Export Container Freight Index of the Shanghai Shipping Exchange has been released, and the freight rate is at full power. This week, the SCFI index reached 1759.58 points, an increase of 504.59 points. Not only has it achieved five consecutive increases, but this time the increase has directly exceeded the sky-high price, setting a new record. The largest single-week increase of 40.21%.
The latest trend of SCFI freight index on major routes
The four major ocean routes surged across the board, especially the European route and the Mediterranean route, which continued last week’s gains, reaching US$2,694 and US$3,491 respectively. The freight rates of the European route soared by 80% in a week, and the increase reached 245.83% in the past month; the freight rates of the Mediterranean route surged by 80%. The price increased by 70% on a weekly basis and reached a monthly increase of 195.35%; such an increase was more violent than the epidemic tsunami.
International logistics practitioners believe that as long as the Red Sea crisis remains, freight rates will continue to rise. Currently, quotations for European routes continue to rise strongly in early January. Ships choose to take detours to avoid risks in the Red Sea, resulting in longer voyages and an increase in the number of ships required. This change has had a crowding-out effect on other routes, causing ship dispatching on other routes to be affected, which in turn has pushed up freight rates on other routes, including the US line. SCFI will hit 2,000 points next week.
Industry experts pointed out that although the US military has formed a “convoy alliance” to protect the safety of merchant ships, only some ships of shipping giants Maersk and CMA CGM have decided to resume Red Sea routes. Other shipping companies have yet to follow suit. As of December 27, nearly 20% of the world’s container fleet, equivalent to 364 ultra-large container ships with a total capacity of more than 2.5 million TEU, was forced to bypass the Cape of Good Hope.
The dispatch of global shipping is not something that can be switched quickly between talking and laughing. Once a shipping company starts to choose a detour, the time for improvement will have to wait until the end of the entire voyage. At present, the timing of the detour remains unresolved, so freight rates will remain high in the short term.
If the crisis in the Red Sea region persists, the market is expected to face a shortage of empty containers before the Lunar New Year.
In addition, a freight forwarder revealed that the European quotation for 40-foot containers has climbed to US$4,200 in the first week of January (from the 1st), and further increased to US$5,200 in the second week (from the 8th). The freight rate for 40-foot containers on the US line will also increase by US$1,000 on January 1, with the US West line rising to US$3,000 and the US East line rising to approximately US$4,000.
Whether the price increase can be successful and by how much depends on the evolution of the situation in the Red Sea and the tug-of-war between the shipping and cargo parties. This shows that freight rates in January 2024 will continue to show an explosive growth trend.
The latest SCFI freight index released:
Europe: On European routes, tensions continue in the Red Sea. Currently, there are major differences in the shipping market, and commercial shipping from the Red Sea to the Suez Canal will face great uncertainty in the future due to geopolitical tensions. Market freight rates continued to rise sharply this week.
The freight rate for the route from the Far East to Europe is US$2,694/TEU, an increase of US$1,197 or 79.96% from the previous period;
The freight rate for the route from the Far East to the Mediterranean is US$3,491/TEU, an increase of US$1,437 or 69.96% from the previous period.
United States: North American routes, transportation demand remains stable and supply and demand fundamentals are solid. Driven by rising freight rates on other routes, booking prices in the spot market continue to rise this week.
The freight rate from the Far East to the US West is US$2,553/FEU, an increase of US$698 or 37.63% from the previous period;
The freight rate from the Far East to the US East is US$3,559/FEU, a sharp increase of US$577 or 19.35% from the previous period.
Persian Gulf routes: Transportation demand performed well and supply and demand fundamentals were solid. The market of this route continues to be affected by the tension in the Red Sea region, and the market freight rate continues to rise sharply. The freight rate per box is US$2,045, an increase of 38.5% from the previous issue.
Australia-New Zealand route: The local demand for various materials has been generally stable recently, the relationship between supply and demand continues to improve, and booking prices in the spot market continue to rise this week. The freight price per box was US$1,051, an increase of 13.9% from the previous issue.
South American routes: Transportation demand is generally stable, supply and demand remain balanced, and market freight rates continue to rise this week. The freight rate per box was US$2,793/TEU, an increase of 19.4% from the previous issue.
Near ocean line: Far East to JapanEach TEU in China and Kanto remained unchanged from the previous week at US$299 and US$306; each TEU from the Far East to Southeast Asia increased by US$1 to US$208, and each TEU in South Korea remained unchanged from last week at US$138.
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