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Red Sea Crisis

Container spot rates expected to continue rising in June

Photo: AdobeStock An overhead shot of containerships in port
Fears over a shortage of capacity have continued to push up container freight rates over the past week, hitting levels only previously seen during the pandemic.

Drewry’s World Container Index (WCI) was up 12% week-on-week on 6 June at $4,716 per feu. Meanwhile the Shanghai Containerized Freight Index (SCFI) on 7 June stood at 3184.87 points, a 4.6% increase, slowing from the previous week’s double-digit percentage jump that took it to levels not seen since August 2022.

Rerouting ships from the Red Sea via the Cape of Good Hope casuing a shortage of capacity, growing port congestion, and rising demand, have all conspired to cause a spike in spot rates for containers on key routes.

HSBC Global Research commented in a report issued today that it had underestimated the timing and strength of an earlier peak season in long-haul trades, which fuelled the recent rally in spot container freight rates.

Looking ahead it said: “We believe spot rates might still have momentum to go higher given strong near-term forward bookings and healthy vessel utilisations in June. Congestion and equipment shortages could remain sticky near term, which may take months to fully unwind.”

According to Drewry rates for Shanghai – Genoa were up 17% over the last seven days at $6,664 per feu, while Shanghai to Rotterdam saw a 14% increase to $6,032 per feu.

On the Transpacific rates from Shanghai to Los Angeles were up 11% at $5,975 per feu. Shanghai to New York rose 6% to $7,214 per feu.

Looking ahead Drewry said it, “expects freight rates ex-China to continue rising next week due to the onset of the early peak season”.

HSBC said that a front loading of peak season demand could though present a downside risk to container freight rates later in the second half of 2024.