Mainline operators can expect a windfall for the first quarter of 2024, as the surge in freight rates far exceeds the costs of detouring round the Cape of Good Hope.
Freight rates increased across the board, with Transpacific rates (according to the Shanghai Containerised Freight Index) rebounding sharply last week.
On 12 January, Shanghai-US West Coast rates gained 43% from the previous week to US$3,974/FEU, while Shanghai-US East Coast rates jumped 48% to US$5,813/FEU.
In its report today, Linerlytica stated, “Mediterranean Shipping Company’s rate hike to US$5,000/FEU to the US West Coast and US$6,900/FEU to the US East Coast from 15 January jolted the rest of the carriers into following suit, with spot rates to both the West Coast and East Coast rising by over 40% last week.”
Shanghai-North Europe rates gained 8% to US$3,103/FEU while Shanghai-Mediterranean increased nearly 12% to US$4,037/TEU.
The China Containerised Freight Index recorded its highest ever weekly gain of 21.7%, climbing to 1,140.31 on 12 January, as it recovered most of the previous year’s retreat within a single week, ensuring windfall earnings for carriers in 1Q 2024, observed Linerlytica.
To avoid attacks from Iran-backed Houthi rebels in the Red Sea, many ship operators have chosen to reroute vessels round the Cape, tying up tonnage and increasing voyage times, exerting upward pressure on freight rates.
The rate gains far outweigh the incremental costs from the Cape diversion, with estimates ranging from just US$100 to US$150 per TEU, coming mainly from higher bunkering expenses together with increased vessel and equipment costs which are partially offset by savings from Suez Canal tolls.
Linerlytica estimates that the Red Sea diversions will continue into February, as 70 more ships have detoured round the Cape, although the market expects the usual Lunar New Year lull to cool the rocketing freight rates.
Besides ships operated by CMA CGM which has continued to use the Suez route, all other ships on the services operated by the three main alliances along with ZIM have shifted to the Cape route.
Martina Li
Asia Correspondent
