Shippers are facing a beating in the aftermath of carriers vetoing Red Sea routes. The domino effect has led vessels to circumvent the Suez Canal, opting for the longer route around the Cape of Good Hope. This strategic shift has sent shockwaves through the industry, manifesting in prolonged transit times from Asia to Europe and exponentially higher rates.
The urgency to expedite orders is palpable as shippers attempt to offset the impact of extended voyages. However, the scarcity of equipment in Asia is exacerbating the crisis. Container release is constrained, primarily catering to high-volume “VIP contracts” or those willing to pay a substantial premium.
Reports suggest that carriers are quoting staggering rates exceeding $10,000 per 40ft for China-North Europe sailings in February, emphasizing the severity of the capacity crunch. Xeneta’s Chief Analyst, Peter Sand, warns that paying a relatively low freight rate in the current climate might be risky. Shippers are being nudged toward the spot market, as long-term agreements are deemed lower priority than higher-rate spot contracts.
Container spot indices, reflecting average short-term rates, are witnessing unprecedented surges. For instance, the WCI North Europe component has soared by 164% since December 21, reaching $4,406 per 40ft. Similarly, spot rates from Asia to the Mediterranean climbed 25%, marking a remarkable 166% increase.
Transpacific routes are not exempt from the upheaval. Draft restrictions in the Panama Canal and equipment shortages have led to a rate surge. Carriers, eyeing further gains, are introducing new FAK rates, starting from $5,000 per 40ft for the US West Coast and escalating to $7,000 for East and Gulf Coast ports.
Although spot indices appear stable in the transatlantic arena, hefty rate restoration and peak season surcharges loom on the horizon. Carriers, preparing for the coming weeks, are diverting maximum empty boxes and surplus vessel capacity to backhaul Asia voyages. This concerted effort is anticipated to push transatlantic rates even higher.
Shippers are navigating uncharted waters, compelled to adapt to rapidly evolving circumstances. Flexibility and effective communication with logistics partners become indispensable strategies in this challenging environment. For any concerns about the impact on your cargo, contact your Coppersmith representative today.
