Global ocean freight container shipping has been impacted by numerous geopolitical and environmental incidents in recent times. As you many know, Iranian military forces seized the 14,952 TEU containership MSC Aries while en route to India from the Abu Dhabi port of Mina Khalifa on 13 April. The incident is raising concerns over the safety of ocean freight supply chains in the region.
Freight Rates on this trade continued to climb, the spot market has once again reacted to the recent growing political tensions, increasing by 32% between 22 March and 17 April to reach USD 2 849 per FEU.
Also, global freight encounters disruptions as container carriers reroute away from the Suez Canal, resulting in extended lead times and potential port congestion. Freight rates surge, with Asia-N. Europe rates are up 173%, Asia-Mediterranean prices doubling, and carriers implementing surcharges ranging from $500 to $2,700 per container. Operational challenges include adjusting schedules, adding vessels, and addressing potential congestion and shortages. Carriers, better equipped than during the pandemic, strive to manage diversions and maintain container traffic flow.
Full year 2024 outlook for ocean shipping
S&P Global: the disruptions the logistics world is currently facing will continue for the rest of the year, but the costs associated with shipping have not gone up as much as the spot rates did during the Red Sea attacks and the Panama Canal drought issues, leading to the recent pricing reversal. It’s continuing to see those rates drift down, and that may continue through the rest of the year.
Freightos: even though Asia to West Coast freight rates is lower than the East Coast rates because it’s a shorter route, they have spiked due to both geopolitics and climate change. The Suez diversions affect the whole network. The Panama Canal I think is recovering now, but it is well below its full capacity because of a drought. They depend on rain there to fill the locks in that canal so a lot of importers would prefer to bring their goods into Long Beach port where they’re not dependent on the Panama Canal.
Drewry reported assessment on 18 April 2024
- The composite index decreased by 3% to $2,719 per 40ft container this week and has increased by 53% when compared with the same week last year.
- The latest Drewry WCI composite index of $2,719 per 40ft container is 91% more than average 2019 (pre-pandemic) rates of $1,420.
- The average composite index for the year-to-date is $3,295 per 40ft container, which is $586 higher than the 10-year average rate of $2,709 (which was inflated by the exceptional 2020-22 Covid period).
- Freight rates from Shanghai to New York decreased 5% or $257 to $4,453 per 40ft container. Similarly, rates from Shanghai to Los Angeles dropped 4% or $147 to $3,487 per 40ft box. Likewise, rates on Shanghai to Rotterdam and Shanghai to Genoa declined 2% to $2,989 and $3,577 per feu respectively. Conversely, rates from Rotterdam to New York increased by 3% or $67 to $2,291 per 40ft container. Also rates from Los Angeles to Shanghai increased 2% or $15 to $708 per feu. While rates from Rotterdam to Shanghai and New York to Rotterdam remained stable. Drewry expects a minor decrease in spot rates in the coming week.