Rate Increases Coming
In recent weeks, the global shipping industry has found itself in turbulent waters again as carriers made the unprecedented decision to veto Red Sea routes, triggering a capacity crunch with far-reaching consequences. Shippers, despite holding long-term contracts, are now facing the inevitable reality of premium rates becoming the norm in this challenging environment.
According to crowd-sourced freight rates platform Xeneta, the Red Sea shipping crisis is poised to worsen, necessitating swift action from shippers to secure capacity ahead of the upcoming Chinese New Year. Sea-Intelligence echoed this sentiment, cautioning that exporters from Asia would encounter limited access to capacity in the coming weeks.
Alan Murphy, CEO of Sea-Intelligence, explained the predicament further, stating that a combination of delayed departures and late arrivals in Asia was causing a rapid shortfall in capacity, with a significant drop expected in the middle weeks of January.
Peter Sand, chief analyst at Xeneta, highlighted the repercussions of the high demand for capacity, noting that shippers locked into long-term rate contracts are being compelled onto the spot market as carriers push for higher rates. Sand emphasized that, during such periods, aiming for the lowest price might be counterproductive, as carriers prioritize spot market agreements with higher rates.
Recent data from Xeneta underscored the severity of the situation, revealing a staggering 124% increase in ocean freight rates between the Far East and Northern Europe since mid-December. Rates into the Mediterranean surged by 118%, and the Far East to the US east coast route saw a 45% increase.
In response to these challenges, Future Forwarding is committed to closely monitoring the situation, ensuring the best and most efficient service for its clients. In this dynamic environment, effective communication and flexibility are paramount. Shippers are encouraged to stay in communication with their logistics partners and remain flexible in adapting to market changes, thereby navigating the current storm with resilience and strategic agility. If you have any questions about how this may affect your cargo, reach out to us today.