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Congestion increases, container rates are expected to rise again
Jun 25,2024
The latest container freight data shows that Asia-Europe container freight rates continue to rise, and congestion in Asia is expected to bring further increases.
On June 20, the Drurri World Containers Index (WCI) composite index rose 7% from last week to $5117 per container. Looking at the recent rate hikes, the latest figure is up 233 percent from a year ago and 260 percent above the pre-epidemic average of $1420 in 2019, Druri said.
Container rates have been rising since the end of 2023, as Houthi attacks in the Red Sea caused ships to detour the longer Cape of Good Hope route between Asia and Europe, absorbing capacity with longer voyages and times. The market situation is precarious as there is still structural overcapacity in the liner trade, exacerbated by continued ship deliveries, but supply and demand remain tight as long as the Red Sea remains effectively closed.
Freight rates from China are expected to continue to rise next week because of congestion problems at Asian ports, Druri said. There was chaos at both ends of the Asia-Europe trade, as the diverted ships took longer to sail, bringing with them a large number of arrivals. As European ports struggle to handle the surge in throughput, ships are delayed, and these delays have spread along the ring line to ports such as Singapore.
This week, the Shanghai Container Freight Index (SCFI) rose more slightly, rising 2.85 per cent to 3475.6 points, continuing its rise.
In November 2023, the Shanghai Composite Index barely broke through 1000 points and did not break through 2000 points until the beginning of this year. After weakening slightly in March and April, the index has steadily risen from around 1750 points at the end of April to its current high.
In the long term, the WCI is $3510 per feu so far in 2024, $768 higher than the 10-year average of $2742 per feu. The record high incidence during the 2020-2022 neo-crown epidemic itself exaggerates the 10-year average and masks the persistently low incidence before the neo-crown epidemic.
Looking at individual transactions, Drewry said shipping costs from Shanghai to Rotterdam were $690/feu higher than the previous week, up 11% to $6867/feu. Shanghai to Los Angeles rose 7 per cent to $6441 per feu, Shanghai to New York rose 3 per cent to $7552 per feu and Rotterdam to Shanghai and Shanghai to Genoa rose 2 per cent to $672 and $7029 per feu, respectively.
New York to Rotterdam and Rotterdam to New York prices fell 1 percent to $633 and $2093 per feu, respectively.
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