Table of contents
Topic of the week:
As I am sure everyone is aware the ongoing Red Sea Crisis has had a huge impact on the industry with spot rates spiking to near COVID levels. Xeneta’s mid-year ocean freight update showed that ex-Asia trades have increased 300% more than December 2023, with the main issue for shippers and freight forwarders now being managing freight spend. As rates continue to hike upwards, not only is freight spend a concern, but so is shipping reliability. During COVID, the turbulent freight market lead to uncertainty for shippers, prompting many to resort to air freight for guaranteed space and scheduling. As rates seem to reach closer and closer towards COVID levels once again, there is speculation that sea freight schedules could become unreliable again forcing the move to air once more.
As capacity has become tighter and vessel journey’s have become longer, rates have increased with no sign of faltering soon. In a Xeneta poll, it was shown that 74% of their customers had been affected by surcharges during the Red Sea Crisis as well as 46% of shippers/freight forwarders stating that ‘managing freight spend’ is their primary concern. There is speculation as to how long the Red Sea Crisis and its effects could last, with Lars Jensen stating, “it could be years before we can revert back to normal.” However, Vincent Clerc, Maersk CEO has provided some assurance, “We will see eventually that rates will go back to market as some of these problems get alleviated, either by the new tonnage being phased-in gradually or by us resuming normal sailing routes in the near future.”
Due to scheduling uncertainty and capacity shortages caused by the Red Sea Crisis, more shippers could make the move to air freight. Xeneta’s air freight officer, Wenwen Zhang, noted that, “this is already happening” and that if the situation continues, “the air freight market is set for a turbulent summer.” According to Xeneta MESA to Europe spot rates have reached over double their level compared to this time last year. Not only does the air freight market have to deal with increased demand from shippers moving from sea freight, but it is also dealing with competing eCommerce demand. 30% of ex-Asia air freight capacity is estimated to be taken up by Chinese eCommerce platforms. Many are urging shippers to contact their forwarders to help navigate the climate as well as urging shippers to organise and sign contracts as soon as possible to ensure guaranteed space.
Sea:
- Over the last two weeks China/East Asia to North America West Coast spot rates have increased by 18% from $5,968 /FEU to $7,052 /FEU according to Freightos data.
- China/East Asia to North America East Coast spot rates have risen over the last two weeks, increasing by 9% to $8,253 /FEU.
- Global container spot prices have risen over the last two weeks, and are now sitting at $4,508 /FEU, a 9% increase over the last two weeks and a 249% increase from spot rates this time in 2023 according to the Freightos Baltic Index (FBX)
Air:
- Global Air Freight spot rates currently sit at $2.49, as rates continue to fluctuate according to the Freightos Air Freight Index (FAX)
- Europe to Northern America spot rates currently sit at $1.61 (100-3000kg), says FAX, decreasing by 1.2 %
- Europe to Asia, Greater China spot rates currently sit at $1.28 (100-3000kg), says FAX, decreasing by 0%
That’s all for this week’s update…
Check out our other insights and articles for more in depth industry news and trending topics, or get in contact to discuss some of our best in class freight forwarding services!
