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Spot container shipping rates continued to grow by double digits last week, after a series of price increases and other surcharges took effect from June 1, 2024, just one or two days after the index at the end of May 2024 is published.

Drewry's WCI (World Container Index) recorded weekly gains for the Shanghai-Rotterdam, Shanghai-Genoa and Shanghai-Los Angeles routes which were up 14%, 17% and 11% respectively.

Accordingly, the WCI index for the Asia-North Europe route reached USD 6,032/40-foot container, while Xeneta's XSI index increased by 18.5% to USD 5,647/40-foot container also on this route.

The WCI Shanghai-Genoa index increased to USD 6,664/40-foot container.

The WCI index for Shanghai to Los Angeles reached USD 5,975 per 40-foot container, and Shanghai to New York increased 6% to USD 7,214/40-foot container. According to the XSI index, trans-Pacific freight rates also increased by 19.5% to USD 5,859 /40-foot container.

Drewry said, “Drewry expects freight rates ex-China to continue rising next week, due to the onset of the early peak season.”

Freight forwarders from Europe are warning that freight rates from Asia will exceed the 10,000 USD mark in July 2024. One of them shared with The Loadstar as follows, “As anticipated, spot rates from 1 July are breaching the $10,000 per 40ft barrier, and several carriers’ online pricing platforms already reflect this."

According to records from the BBC news agency in the first week of June, escalating sea freight rates are causing retail prices to rise higher, and whether freight rates continue to increase or not will largely depend on the story. How long does consumer demand last?

“If the demand increase is the early start of the peak season, we can expect demand-side pressure to subside in a few months, and earlier than usual” – Mr. Judah Levine, head analyst of Freightos said.

“Just as rates climbed on a combination of pre-lunar new year demand, and restricted capacity in the first months of the diversions and subsided once demand eased, prices and disruptions should decrease when peak season slows this time as well, although until Red Sea traffic resumes, we can expect rates to fall no lower than their April floor" - he added.

In contrast to routes from Asia, the WCI index recorded a 4% decrease on the transatlantic route from the port of Rotterdam to New York, ending the first week of June at $2,136/40ft.

Meanwhile, container trading platform Container xChange said a shortage of empty containers at export hubs in Asia has caused a container price bubble.

The average price for 40ft high-cube containers at China's main ports has increased 45%, from $2,240 in April 2024 to $3,250 in May 2024. This happened similarly in November 2020, the price of a 40-foot container was around $1,698 but increased to an extreme level of $7,178 in September 2021 at the peak of the Covid pandemic.

Mr. Christian Roeloffs, founder and CEO of Container xChange, said that the reason why ocean freight rates skyrocketed is also the reason why container prices increased, and added that these prices could eventually fall rapidly.

“As we monitor the market closely, it’s evident that the current spike in container prices is not sustainable in the long term, as it is not backed by strong underlying demand.”

“Concerns over labour markets and high interest rates imply that consumers are likely to reduce spending, which could lead to a decline in demand for goods and, consequently, a reduction in shipping volumes in the near term – unless the demand revival becomes stronger and the supply capacity soak-up intensifies."

Mr. Christian Roeloffs concluded, “As the initial rush to restock inventories subsides and the real demand from consumers and businesses remains flat, we anticipate a stabilisation of, or even a decline in, container prices in the mid-term; the market is showing signs of volatility driven by short-term factors, rather than a sustained increase in demand."

 

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Source: Phaata.com (According to The Loadstar) 

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