Freight rates skyrocketed by 600%, reaching $10000

As the situation in the Red Sea intensifies, more and more container ships are avoiding the Red Sea Suez Canal route and detouring the Cape of Good Hope. Shippers are rushing to place orders in advance to alleviate the impact of longer transportation times from Asia to Europe.
However, due to the delay of the return voyage, the supply of empty container equipment in the Asian region is extremely tight, and shipping companies are only limited to large quantities of "VIP contracts" or shippers willing to pay high freight charges.
Nevertheless, it is still impossible to guarantee that all containers delivered to the port will be shipped before the Chinese New Year on February 10th, mainly because the carrier will prioritize higher priced spot goods and extend contracts with lower prices.
On the 12th local time, Consumer News and Business Channel reported that the longer the current tense situation in the Red Sea persists, the greater the impact it will have on global shipping, and shipping costs will also increase. The warming of the Red Sea situation is causing a chain reaction, pushing up global shipping prices.
According to reports, according to statistics, container freight rates on some Asia Europe routes have recently surged by nearly 600% due to the impact of the Red Sea situation. At the same time, to compensate for the impact of the suspension of the Red Sea route, multiple shipping companies are transferring their ships on other routes to the Asia Europe and Asia Mediterranean routes, which in turn has increased the shipping costs of other routes.
According to a report on the Loadstar website, the cabin prices on the China to Nordic route were astonishingly high in February, with freight rates exceeding $10000 per 40 foot container.
However, Peter Sand, Chief Analyst of Xeneta, believes that in the current environment, shippers should not overly rely on low shipping costs until supply chain disruptions are resolved.
Peter Sand emphasized, "The shipper is informed that long-term contract rates will no longer be fulfilled, but will be pushed to the spot market. Therefore, the shipper cannot simply expect to pay lower freight rates, as shipping companies will be more inclined to prioritize contracts reached in the spot market at higher freight rates."
Meanwhile, the container spot index, which reflects average short-term freight rates, continues to soar.
This week, the Deloitte World Container Freight Index (WCI) data showed that the freight rates on the Shanghai Nordic route further increased by 23% to $4406/FEU, up 164% since December 21, while the spot freight rates from Shanghai to the Mediterranean increased by 25% to $5213/FEU, up 166%.

In addition, the shortage of empty container equipment and the drought draft restrictions on the Panama Canal have also pushed up the freight rates for the Trans Pacific route. Since the end of December last year, the Asia West freight rate has increased by about one-third to around $2800 per 40 feet. Since December last year, the average freight rate between Asia and the East has increased by 36%, reaching around $4200 per 40 feet.

However, if the shipping company's freight rates meet expectations, these spot rates will appear relatively low in a few weeks. Some trans Pacific shipping companies will introduce new FAK rates, which will take effect from January 15th. The shipping cost for a 40 foot container on the West Coast of the United States will reach $5000, while the shipping cost for a 40 foot container at ports along the East Coast and Gulf of Mexico will reach $7000.
As tensions in the Red Sea continue to escalate, Maersk warns that the interruption of Red Sea shipping may last for several months. As the world's largest liner operator, Mediterranean Shipping (MSC) has announced an increase in freight rates for late January starting from the 15th. Industry predictions suggest that trans Pacific freight rates may reach a new high since early 2022.
Mediterranean Shipping (MSC) has announced new freight rates for the second half of January. Starting from the 15th, the freight rates for the US West route will increase to $5000, the US East route will increase to $6900, and the Gulf of Mexico route will increase to $7300. In addition, CMA CGM has also announced that starting from the 15th, the freight rate for 20 foot containers destined for ports in the Western Mediterranean will be increased to $3500, while the freight rate for 40 foot containers will increase to $6000.
According to data analysis by Dexun, as of the 12th, there are 388 confirmed container ships that have changed course due to the Red Sea situation, with an estimated total capacity of 5.13 million TEUs. 41 ships have arrived at their first destination port after changing lanes. Logistics data analysis firm Project44 also pointed out that the daily vessel traffic of the Suez Canal has sharply decreased by 61% compared to before the Houser armed attack, to an average of 5.8 vessels.