Eastbound Exodus: Shifting Container Routes Amidst Rising Rates

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Mfame Editor
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Judah Levine, Research Lead at Freightos, is a seasoned market research manager specializing in data-driven analytics. He provides market-based insights, contributing to the Freightos Group’s FBX Weekly Freight Update. Judah’s expertise encompasses diverse aspects of the industry, from shipper behaviours to the latest developments in logistics technology and digitization.

Key Insights from December 2023

  1. Global Freight Rates Surge:
    • The Freightos Baltic Global index saw a notable 16% MoM increase in December 2023, reaching $1,341/FEU. Early capacity-driven General Rate Increases (GRIs) were followed by additional spikes related to Red Sea disruptions.
  2. Regional Rate Dynamics:
    • Asia to US West Coast rates rose by 5% to $1,695/FEU, indicating a potential shift in volumes to avoid East Coast delays. Rates to the East Coast increased by 7% to $2,525/FEU in December, and further spikes occurred in early January, possibly influenced by Red Sea diversions.
  3. European Trade Routes Impact:
    • Asia to North Europe and Mediterranean rates experienced significant increases, with North Europe climbing 31% to $1,590/FEU, and Mediterranean prices surging by 61% to $2,401/FEU. Europe to North America rates fell by 4%, reaching $1,176/FEU, with no direct impact from Red Sea disruptions.
  4. Red Sea Crisis and Future Challenges:
    • Red Sea disruptions influenced rates, with January rates surpassing $4,000/FEU to Europe and $5,000/FEU to the Mediterranean. Ongoing Houthi attacks and international efforts to restore security in the Red Sea may pose challenges for container shipping, leading to possible port congestion and empty container shortages.

Outlook for January and Beyond

Container shipping faces potential challenges such as port congestion and empty container shortages, compounded by increased demand ahead of the Lunar New Year, until Red Sea traffic returns. Ongoing General Rate Increases (GRIs) and surcharges are expected to persist, keeping rates above normal levels.

Judah Levine’s insights highlight the complex interplay of geopolitical events, trade route dynamics, and market forces shaping the global container shipping landscape.

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Source: balticexchange