- The Freightos Baltic Global index surged by 154% month-on-month in January, reaching $3,411/FEU.
- Despite international naval efforts and military strikes in Yemen, Red Sea traffic continued to face attacks, prompting widespread diversions away from the Suez Canal.
- Space and equipment shortages out of Asian export hubs intensified ahead of the Lunar New Year (LNY), driving rates upward significantly.
- Carriers are adjusting schedules and adding vessels to accommodate longer voyages and improve reliability, with demand-side pressure expected to ease after LNY.
- Non-Red Sea lanes, such as transatlantic routes, experienced a slight decline in rates in January, with carriers postponing planned rate increases until February.
Challenges And Shifts In Global Shipping Dynamics
In January, the Freightos Baltic Global index surged by 154% compared to the previous month, reaching $3,411/FEU. This substantial increase was driven by shifts away from the Red Sea routes and heightened demand before the Lunar New Year, prompting a surge in General Rate Increases (GRIs) and surcharges due to tightening capacity and equipment availability.
Despite an international naval force in place and US and UK strikes on Houthi positions in Yemen, attacks on Red Sea traffic continued through January as did widespread container carrier diversions away from the Suez Canal.
The longer journey around the Cape of Good Hope for ex-Asia to N. Europe and Mediterranean ports, and some Asia-N. American East Coast traffic has resulted in higher costs to carriers in the form of fuel and the need to operate additional vessels to move the same number of containers. The longer transit times have also disrupted schedules, and, together with an increase in demand ahead of LNY, made space and empty equipment availability tight out of Asian export hubs, leading to significant upward pressure on rates. Despite these challenges, reports of significant port congestion have been minimal.
Global Shipping Challenges And Rate Surges
The longer transit times have also disrupted schedules, and, together with an increase in demand ahead of LNY, made space and empty equipment availability tight out of Asian export hubs, leading to significant upward pressure on rates. Despite these challenges, reports of significant port congestion have been minimal.
Prices for Asia – N. America East Coast containers increased 144% to $6,152/FEU month-on-month in January, 86% higher than in 2019. And though not directly impacted by diversions, rates for Asia – N. America West Coast rates increased by 142% to $4,099/FEU as some demand may be shifting to the West Coast to avoid diversion impacts and as equipment shortages in Asia may be impacting transpacific rates as well.
The Red Sea crisis likewise meant that Asia to N. Europe rates spiked 243% in January to $5,456/FEU, and to the Mediterranean, prices increased by 169% to $6,449/FEU, though rates leveled off late in the month.
Post-Lunar New Year Shipping Outlook
Carriers are still working to add vessels and adjust ongoing schedules which should accommodate the longer voyages and help improve reliability in the coming weeks. Demand-side pressure is expected to ease in the period after LNY too. So, as operations improve and with pre-LNY urgency likely a significant contributor to rate increases in January, freight rates – despite GRIs and surcharges announced for February – may be reaching their ceiling and will likely ease from their current levels post-LNY. Transit times and rates, however, will stay above normal levels until Red Sea traffic resumes.
Congestion shifts of capacity to Suez Canal lanes, and equipment shortages may not be impacting non-Red Sea lanes as much as carriers had anticipated, as transatlantic rates fell by 1% to $1,168/FEU in January. Carriers are postponing planned GRIs and surcharges – some aimed at pushing rates up to the $5k/FEU level – until February.
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Source: balticexchange
