Oslo – Norway, 14 June 2024
Ocean freight container shipping spot rates are set to increase further, but there are signs the recent dramatic growth may be slowing.
The latest data from Xeneta, the ocean freight rate benchmarking and intelligence platform, indicates spot rates on major trades out of the Far East will increase again on 15 June, but to a less dramatic extent than witnessed in May and early June.
Average spot rates from the Far East to US West Coast are set to increase by 4.8% on 15 June to stand at USD 6 178 per 40ft equivalent container (FEU). However, on 1 June, rates on this trade increased by 20%.
From the Far East into the US East Coast, rates are set to increase by 3.9% on 15 June to stand at USD 7 114 per FEU. Again, this is a far less dramatic jump than when rates increased by 15% on 1 June.
Peter Sand, Xeneta Chief Analyst, said: “Any sign of a slowing in the growth of spot rates will be welcomed by shippers, but this is an extremely challenging situation and it is likely to remain so.
“The market is still rising and some shippers are still facing the prospect of not being able to ship containers on existing long term contracts and having their cargo rolled.”
Average spot rates from the Far East to North Europe are set to increase by 10% on 15 June to reach USD 6357 per FEU. While less than the 20% jump on 1 June, it is still a significant mid-month increase and would be viewed as an extremely significant upwards market movement in isolation.
Into the Mediterranean, average spot rates from the Far East are set to increase by 7.2% on 1 June to USD 7 048 per FEU, which compares to a rise of 19% on 1 June.
Sand said: “Compared to mid-December last year before the outbreak of conflict in the Red Sea, average spot rates from the Far East are up 276% into the US West Coast and 316% into North Europe – these are huge financial hits for shippers to absorb.
“With ongoing conflict in the Red Sea region, congestion at ports in the Mediterranean and Asia, equipment shortages and shippers frontloading imports ahead of the Q3 peak season, the pressure within the ocean freight container shipping system is still at severe levels.
“The breakdown of labor negotiations and threat of union action at US East Coast and Gulf Coast ports will add even more pressure and move the needle further into the red.
“We must also consider the potential impact spiraling ocean freight container shipping spot rates can have on inflation in the US and Europe if these increasing costs are ultimately passed on to the end consumers.
"At the moment it is unlikely – but not impossible – that spot rates will reach the levels seen during the Covid-19 pandemic but there are so many factors in play it is not possible to predict the market with any degree of certainty.
“For example, any potential ceasefire between Israel and Hamas could change the picture completely if it helps to end attacks on container ships by Houthi militia and see a large-scale return of carriers to the Red Sea region.”
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