Home
FacebookTwitterSearchMenu
  • Subscribe
  • Subscribe
  • News
  • Features
  • Knowledge Library
  • Columns
  • Customs
  • Jobs
  • Directory
  • FX Rates
  • Categories
    • Categories
    • Africa
    • Air Freight
    • BEE
    • Border Beat
    • COVID-19
    • Crime
    • Customs
    • Domestic
    • Duty Calls
    • Economy
    • Employment
    • Energy/Fuel
    • Events
    • Freight & Trading Weekly
    • Imports and Exports
    • Infrastructure
    • International
    • Logistics
    • Other
    • People
    • Road/Rail Freight
    • Sea Freight
    • Skills & Training
    • Social Development
    • Technology
    • Trade/Investment
    • Webinars
  • Contact us
    • Contact us
    • About Us
    • Advertise
    • Send us news
    • Editorial Guidelines
Logistics
Sea Freight

Spot rates soar as Red Sea crisis continues

31 May 2024 - by Staff reporter
 Source: Stax Bill
0 Comments

Share

  • Facebook
  • Twitter
  • Google+
  • LinkedIn
  • E-mail
  • Print

Ocean freight container shipping spot rates are set to exceed the level seen at the height of the Red Sea crisis when the latest round of increases hit the market on June 1.

This is according to the latest data released by ocean and airfreight rate benchmarking and market analytics platform, Xeneta, on Thursday.

Xeneta chief analyst, Peter Sand, said the ocean freight container shipping market had seen “rapid and dramatic” increases during May, a trend that was set to continue, with further growth in spot rates.

“On June 1, spot rates will reach a level we haven’t seen since 2022 when the Covid-19 pandemic was still wreaking chaos across ocean freight supply chains,” Sand said.

“There is a cocktail of uncertainty and disruption across global ocean freight supply chains at present and this is fuelling the spot rate increases. However, it is the speed and magnitude of this recent spike that has taken the market by surprise, as well as the CEOs of the world’s biggest ocean freight liner companies,” he said.

From the Far East to US West Coast, market average spot rates are expected to reach $5 170 per FEU on June 1, which would surpass the Red Sea crisis peak of $4 820 seen on February 1. This is an increase of 57% during May and the highest spot rates have been on this trade for 640 days.

From the Far East to US East Coast, spot rates are expected to reach $6 250 per FEU, only slightly shy of the Red Sea crisis peak of $6 260 and an increase of 50% since April 29.

Spot rates are also set to exceed the Red Sea crisis peak on the Far East to North Europe trade, reaching $5 280 per FEU on June 1. This will be the highest rates have been on this trade for 596 days and an increase of 63% since April 29.

On the Far East to Mediterranean trade, spot rates are expected to edge past the Red Sea crisis peak of $5 985 per FEU on January 16 to reach $6 175 on June 1. This will be an increase of 46% during May and the highest rates have been on the trade for 610 days.

Factors fuelling ocean freight container spot rates spike

According to Xeneta’s data, the market is heavily impacted by a cocktail of factors including ongoing conflict in the Red Sea, port congestion and shippers deciding to frontload imports ahead of the traditional peak season in the third quarter.

“Importers have learned lessons from the pandemic and the most straightforward way to protect supply chains is to ship as many of your goods as you can as quickly as possible. That is what we are seeing, with some businesses telling us they are already shipping cargo for the Christmas period in May,” Sand said.

“The early arrival of the peak season is adding to the cocktail of uncertainty in the market. Back at the start of 2024, you could point to the Red Sea crisis as the root cause of spot rate increases; this time around it is far more nuanced.”

Ocean freight carriers have tried to remedy the diversions in the Red Sea by increasing transhipments in the Western Mediterranean as well as in Asia, but this has led to severe port congestion in several hubs.

“Carriers have tried to realign capacity from other major trades to cope with longer sailing distances around the Cape of Good Hope on services from the Far East to Europe and US East Coast, but this has contributed to rates increasing on trades such as the Transpacific, which do not transit the Suez Canal,” Sand said.

“Everywhere you look there are knock-on impacts and unintended consequences which only serve to fan the flames of uncertainty across the ocean freight container shipping industry.”

He said carriers prioritised shippers paying the highest rates.

“That means cargo belonging to shippers paying lower rates on long-term contracts is at risk of being left at the port. It happened during the Covid-19 pandemic and it is happening again now,” Sand said.

“We are also seeing freight forwarders being hit with new surcharges and being pushed onto premium services to have space guaranteed onboard ships. In such cases, they have no other option than to pass these costs on directly to their shipper customers.”

Sign up to our mailing list and get daily news headlines and weekly features directly to your inbox free.
Subscribe to receive print copies of Freight News Features to your door.

Port of Lüderitz's infrastructure under significant strain

Africa
Sea Freight

It comes at a time of increased volumes of oil and gas cargo, as well as bulk and infrastructure project cargoes.

30 minutes ago
0 Comments

West Africa marks historic ULCV milestone

Imports and Exports
Logistics

The Port of Lomé has undergone a decade of rapid transformation to reach this point.

1 hour ago
0 Comments

China Airlines rolls out wider digital integration

Air Freight
Logistics
Technology

WebCarg is linked to 7LFreight’s rate management system for dynamic pricing and instant bookings.

1 hour ago
0 Comments

Police seize counterfeit goods worth R400m

Crime
Imports and Exports
Logistics

A raid of a freight warehouse in Durban led to the recovery of branded clothing and kitchenware.

2 hours ago
0 Comments

Looming food security crisis over SA’s Brazil poultry ban

Imports and Exports

Meat importers warn that the local industry will not be able to plug the gap left by the ban.

2 hours ago
0 Comments

Institute conference set to focus on regional connectivity

Events
Logistics

The event brings together transport and logistics professionals from across the continent.

Today 10:15
0 Comments

Punishing duties backfires on US economy

Economy
Imports and Exports

“South Africa must follow its own fiscal policies rather than the US Federal Reserve.” – Ricardo Smith, Absa chief investment officer.

Today 10:15
0 Comments

RFA warns of imminent B-BBEE codes risk

Logistics
Road/Rail Freight

The association plans to meet with the transport minister to discuss how the codes will hurt the industry.

Yesterday
0 Comments

OBITUARY: Trade giant Pat Corbin passes on

Logistics
People
Trade/Investment

Over the years, Corbin was intrinsically involved in international trade, finance and logistics.

Yesterday
0 Comments

South Africa cements position as leading apple exporter

Imports and Exports

South Africa is growing its lead over rival Chile since surpassing it in 2023.

Yesterday
0 Comments

DRC-Walvis Bay trade route in development

Road/Rail Freight

The new corridor will be 235km shorter than the current Walvis Bay-Ndola-Lubumbashi corridor and up to seven days faster.

Yesterday
0 Comments

MSC confirms weekly continuation of SA-US direct sailings

Sea Freight

In total, eight vessels will be deployed for the express service to America's East Coast.

Yesterday
0 Comments
  • More

FeatureClick to view

Namibia 23 May 2025

Border Beat

BMA steps in to help DG and FMCG cargo at Groblersbrug
21 May 2025
The N4 Maputo Corridor crossing – congestion, crime and potholes
12 May 2025
Fuel-crime curbing causes tanker build-up at Moz border
08 May 2025
More

Featured Jobs

New

Sea Export Controller

Tiger Recruitment
East Rand
28 May
New

Supply Chain Specialist

Lee Botti & Associates
Cape Town
28 May
More Jobs
  • © Now Media
  • Privacy Policy
  • Freight News RSS
  • About Us
  • Advertise
  • Send us news
  • Contact us