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Freight rates soar in global shipping market, future trends a mystery
Date:2024-07-09 Readers:
As June draws to a close, the world's major ocean container trade markets continue to be tight, with spot rates and surcharges continuing to rise and showing new increases every week, according to Vespucci Maritime CEO Lars Jensen, who said that the current rate of growth is quite similar to the pattern seen in the early days of the outbreak. Whether the market will continue this trend, or whether a reversal is on the horizon, will be a major concern for the industry.

Jensen pointed out that the three main factors driving current market conditions are: large ships bypassing Africa, congestion in Asian ports, and surging demand for Asian exports. While a short-term solution to the Red Sea crisis will be challenging, the congestion in Asian ports seems to indicate that tightening market conditions could peak in July and gradually ease in the second half of the peak season, which is expected to end in September.

Regarding the Red Sea crisis, Jensen particularly emphasised its importance for the fourth quarter and 2025. He predicts that continued vessel detours are expected to improve the global supply/demand balance as new vessels are delivered. With normal demand growth, the market is expected to remain stable and avoid overcapacity.

However, Jensen also cautioned that while overcapacity due to the reopening of the Suez Canal or a collapse in demand seems unlikely in the short term, the possibility of major labour disruptions on the US East Coast in September could trigger port congestion and vessel delays, which in turn could adversely affect global supply and demand dynamics.

Recall that freight rates experienced two significant increases during the epidemic. The first was in late 2020-early 2021, triggered by the knock-on effect of the epidemic, and the second was in late 2021-early 2022, when freight rates reached a record level of $15,000 per FFE because of the Ever Given incident in the Suez Canal.

Lars Jensen warned that a strike on the US East Coast in September could trigger a similar impact, leading to another spike in freight rates. He advises relevant stakeholders to keep a close eye on two key factors in the short to medium term: firstly, whether demand cools off in July; and secondly, the outcome of union negotiations on the US East Coast.

In the longer term, Jenssen believes that the ongoing conflict in the Middle East and the permanent presence of Western navies in the southern Red Sea and Gulf of Aden will continue to have an impact on global shipping networks. These factors are likely to result in major container routes continuing to choose to bypass Africa in the coming years.


https://www.cnss.com.cn/html/gkdt/20240709/354013.html

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