The impact of the Red Sea crisis is less severe than Covid-19, although the TEU-mile boost has been significant.
Clarksons’ latest Container Intelligence Monthly stated that compared with December 2023, TEU-miles have gone up by around 11%, as around 620 ships of 8.5 million TEUs are rerouting from the Suez Canal to the Cape of Good Hope to avoid attacks from Houthi rebels.
Decrease in index points
The Shanghai Containerised Freight Index (SCFI) hit 5,110 points in January 2022, but currently, the index has been hovering around 2,200 points.
Clarksons said, “Indeed, while shipper costs have increased significantly amid current disruption, they remain well below those during the pandemic.”
Cost increase
The world’s largest shipbroker illustrated that the cost of shipping a pair of shoes from Asia to Europe went up by 21 US cents in early December 2023 to 78 US cents in mid-January 2024, but remains below the January peak of US$1.95.
However, once the crisis is resolved, 2025 is expected to become a challenging year for container shipping, with more than 2 million TEU of newbuilding deliveries that year, amounting to fleet growth of 5%.
Clarksons cautioned, “Capacity management is likely to be difficult, given the scale of cumulative supply growth (end-2025 fleet set to be more than 20% bigger than start 2023). A reasonably ‘solid’ year for container trade volume growth is projected though, at 3%, and further reductions in vessel speeds could mitigate some of the supply pressure (efforts to cut emissions and green policies continuing to support), helping markets to potentially reach a ‘floor’ as macroeconomic headwinds ease.”
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Source : Container news
