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Early peak season along with bad weather and port congestion cause container freight rates to spike unexpectedly
Spot container freight rates continue to increase sharply due to a combination of factors such as the Red Sea crisis, rising demand, along with bad weather causing congestion and delays at Chinese ports and concerns supply interruption.
The Drewry World Container Index (WCI) increased another 16% last week to reach $4,072/feu on May 23 and was 142% higher than the same time in 2023.
The increase in the Shanghai Container Freight Index (SCFI) was lower, but still up a significant 7.24% to 2,703.43 points on May 24. In the previous two weeks, the SCFI increased 29.8%.
Drewry's WCI showed strong gains on both Asia-Europe and trans-Pacific routes. Freight rates from Shanghai to Rotterdam increased by 20%, or $827, to $4,999/40ft container while rates from Shanghai to Los Angeles increased by 18%, or $801, to $5,277/feu.
Meanwhile, spot freight rates on the Shanghai to New York route increased by 13%, equivalent to 746 USD, to 6,463 USD/feu.
In its monthly container market report, published ahead of this week's price data, analyst Maritime Strategies International (MSI), said the unexpected recovery outside the "traditional" peak season has caught shippers by surprise.
MSI said the increase was most likely driven by a combination of the ongoing Cape Of Good Hope diversions, a stronger-than-expected demand recovery and poor weather causing delays at major Chinese ports.
“This confluence of factors is the most likely explanation for a freight rate rally outside of the “traditional” peak season but it is still too early to draw definitive conclusions. The barrage of General Rate Increases (GRIs) by major liners in April and the 1st and 15th of May have also contributed to the spot freight rate surge,” MSI said.
The analyst sees US and European shippers in the midst of restocking and may be concerned about supply disruptions, especially in the US, as the summer months have led to a “early peak season".
MSI forecasts more GRI in June. Meanwhile Drewry said it expected the spike in spot freight rates to lessen in the next few months.
Read more:
- International shipping and logistics market update - Week 21/2024
- Red Sea crisis helps container shipping lines increase profits
Source: Phaata.com (According to Seatrade Maritime)
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