Ocean freight container shipping spot rates are set to exceed the level seen at the height of the Red Sea crisis when the latest round of increases hit the market on 1 June.
According to the latest data released by Xeneta, from the Far East to the US West Coast, market average spot rates are expected to reach $5,170 per FEU on 1 June, which would surpass the Red Sea crisis peak of $4,820 seen on 1 February. This is an increase of 57 per cent during May and the highest spot rates have been on this trade for 640 days.
From the Far East to the US East Coast, spot rates are expected to reach $6,250 per FEU on 1 June, only slightly shy of the Red Sea crisis peak of $6,260 and an increase of 50 per cent since 29 April.
Spot rates are also set to exceed the Red Sea crisis peak on the Far East to North Europe trade, reaching $5,280 per FEU on 1 June compared to $4,839 on 16 February. This will be the highest rate to have been on this trade for 596 days and an increase of 63 per cent since 29 April, reported Xeneta.
Similarly, on the Far East to Mediterranean trade, rates are expected to edge past the Red Sea crisis peak of $5985 per FEU on 16 January to reach $6,175 on 1 June. This would be an increase of 46 per cent during May and the highest rates have been on the trade for 610 days.
The latest data released by Xeneta indicates the market is heavily impacted by several factors including the ongoing conflict in the Red Sea, port congestion and shippers deciding to frontload imports ahead of the traditional peak season in Q3.
READ: Port congestion heightens container market troubles
Peter Sand, Xeneta Chief Analyst, said: “The ocean freight container shipping market has seen rapid and dramatic increases during May and that is set to continue with further growth in spot rates.
“On 1 June, spot rates will reach a level we haven’t seen since 2022 when the COVID-19 pandemic was still wreaking chaos across ocean freight supply chains.
“There is a cocktail of uncertainty and disruption across global ocean freight supply chains at present and this is fueling the spot rate increases. However, it is the speed and magnitude of this recent spike that has taken the market by surprise, including the CEOs of the world’s biggest ocean freight liner companies.”
READ: Red Sea crisis has no real impact on capacity
Sand added: “Importers have learned lessons from the pandemic and the most straightforward way to protect supply chains is to ship as many of your goods as you can as quickly as possible. That is what we are seeing with some businesses telling us they are already shipping cargo for the Christmas period in May.
“The early arrival of peak season is adding to the cocktail of uncertainty in the market. Back at the start of 2024, you could point to the Red Sea crisis as the root cause of spot rate increases, this time around it is far more nuanced.
“Ocean freight carriers have tried to remedy the diversions in the Red Sea by increasing transshipments in the Western Mediterranean as well as in Asia, but this has led to severe port congestion in several hubs.
“Carriers have tried to re-align capacity from other major trades to cope with longer sailing distances around the Cape of Good Hope on services from the Far East to Europe and the US East Coast, but this has contributed to rates increasing on trades such as the Transpacific, which do not transit the Suez Canal.
“Everywhere you look there are knock-on impacts and unintended consequences which only serves to fan the flames of uncertainty across the ocean freight container shipping industry.”
