Impact Of Red Sea Diversions And Market Adjustments On Global Freight Rates

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  • The Freightos Baltic Global index fell by 22% month-on-month to $2,624/FEU in March, attributed to reduced Lunar New Year demand and adjustments to longer routes due to Red Sea diversions.
  • Despite the decline, rates remain elevated, with prices expected to stay 1.5 to 2 times higher than normal.
  • Regional adjustments show drops in rates to North America and Europe, indicating ongoing market volatility and operational challenges.
  • Transatlantic rates decreased by 11%, suggesting stabilization in operations amidst potential disruptions.

Following the subsiding of Lunar New Year demand and adjustments to longer routes due to Red Sea diversions, the Freightos Baltic Global index fell by 22% month-on-month to $2,624/FEU in March. Despite this decline, rates remain significantly elevated, with prices expected to stay 1.5 to 2 times higher than normal as long as diversions persist, reaching 102% higher than 2019 levels by the end of March.

Regional Rate Adjustments

Rates from Asia to North America’s West Coast dropped by 22% to $3,728/FEU compared to February, yet they remain 190% higher than in 2019. Similarly, rates to the East Coast decreased by 21% to $5,284/FEU, standing 113% above 2019 levels. Operational improvements, such as easing Panama Canal restrictions and concerns over potential port labor disruptions, could influence peak season demand dynamics.

European Trade Dynamics

Rates from Asia to Northern Europe declined by 30% to $3,189/FEU, while Mediterranean rates fell by 13% to $4,352/FEU. Despite these decreases, prices remain significantly elevated compared to 2019 levels, indicating ongoing market volatility and carrier strategies to stabilize rates.

Transatlantic Trade

Transatlantic rates decreased by 11% in March, suggesting stabilization in operations despite earlier price hikes possibly linked to Red Sea diversions and equipment availability issues. However, the impact of the Baltimore bridge collapse and potential ILA strike later in the year could introduce further uncertainties to transatlantic trade dynamics.

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Source: Baltic Exchange