Surge in Ocean Freight Rates Sparks Early Peak Season Speculation

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Ocean freight container spot rates have risen sharply on the world’s top trades since the start of May, prompting speculation that the peak season will arrive early in 2024. What is less clear are the reasons behind these dramatic rate movements, reports Xeneta.

Dramatic rate movements

The biggest rise comes in the Far East to North Europe trade which increased by 30% from 1 April (USD 3 349) to stand at USD 4 343 per FEU on 16 May. This is 198% higher than 12 months ago (USD 1 456).

From the Far East into the US West Coast, rates have increased by 29% since the start of April (USD 3 456) to stand at USD 4 468 per FEU on 16 May. This is 214% higher than 12 months ago (USD 1 422).

From the Far East into the Mediterranean, rates have increased by 22% since 1 April (USD 4 144) to stand at USD 5 044 on 16 May – an increase of 100% compared to 12 months ago (USD 2 521).

From the Far East into the US East Coast, rates have increased by 21% since 1 April (USD 4 617) to stand at USD 5 584 on 16 May – an increase of 129% compared to 12 months ago (USD 2 434).

Emily Stausbøll, Xeneta Senior Shipping Analyst, said: “There are numerous reasons for these rate increases, and the speed at which it has happened has caused nervousness in the market.”

Long-term rates on major trades have remained relatively flat in Q2 and have not followed the short-term rates, which suggests carriers are playing the two markets separately.

The shadow of black swan events also looms large over the industry. As well as the Red Sea crisis, there are still ongoing restrictions in the Panama Canal and signs of escalation in the US-China trade war.

Stausbøll reiterated that, while spot rates are increasing on major trades out of the Far East, it is vital for shippers to understand their supply chains and the risks attached to them, to make them more resilient.

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Source: Xeneta