Congestion is intensifying, and container freight rates are expected to rise again

2024-06-25 09:46

The latest container freight rate data shows that container freight rates in Asia and Europe continue to rise, and congestion in Asia is expected to bring further increases.

On June 20, the composite index of the Drewry World Container Index (WCI) rose 7% from the previous week to $5,117 per container. Looking at the recent rate hikes, the latest data is up 233 percent from the same period last year and 260 percent above the pre-pandemic average of $1,420 in 2019, Drury said.

      Container rates have been rising since the end of 2023 as Houthi attacks in the Red Sea have caused ships to detour through the longer Cape of Good Hope route between Asia and Europe to absorb capacity for longer voyages and time. The market situation is volatile as there is still structural overcapacity in the liner trade, which has been exacerbated by continued vessel deliveries, but supply and demand remain tight as long as the Red Sea remains effectively closed.
      Drewry said freight rates from China are expected to continue to rise next week due to congestion at Asian ports. There was confusion at both ends of the Asia-Europe trade, as diverted ships sailed longer, bringing in a large number of arrivals. Vessel delays have been delayed as European ports have struggled to handle throughput surges, and these delays have spread along the loop to ports such as Singapore.
      This week, the Shanghai Container Freight Index (SCFI) rose by 2.85% to 3475.6 points, continuing to rise.
      In November 2023, the Shanghai Composite Index barely crossed 1,000 points, and it did not break through 2,000 points until the beginning of this year. After a slight weakness in March and April, the index has steadily risen to its current highs from around 1,750 points at the end of April.
      In the long term, the WCI is $3,510 per feu so far in 2024, $768 more than the 10-year average of $2,742 per feu. The record-high incidence during the 2020-2022 pandemic itself inflated the decade-average and masked the persistently low pre-pandemic incidence.
      Looking at individual transactions, Drewry said freight from Shanghai to Rotterdam was $690/feu higher than the previous week, up 11% to $6,867/feu. The price from Shanghai to Los Angeles rose 7% to $6,441 per feu; Shanghai to New York rose 3% to $7,552 per feu, while Rotterdam to Shanghai and Shanghai to Genoa rose 2% to $672 and $7,029 per feu, respectively.
      Prices from New York to Rotterdam and Rotterdam to New York fell by 1% to $633 and $2,093 per feu, respectively.

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