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Ocean freight spot rates to surpass Red Sea crisis levels

According to Xeneta, ocean freight container shipping spot rates are anticipated to exceed previous highs observed during the Red Sea crisis with the upcoming adjustments on June 1. Peter Sand, Chief Analyst at Xeneta, highlighted the rapid ascent of spot rates in May, predicting further increases. He noted the current market is influenced by a mix of uncertainty and disruptions, with the recent surge surprising many, including CEOs of leading ocean freight liner companies.

Market data reveals significant increases across various trade routes. For instance, rates from the Far East to the US West Coast are expected to hit US$5,170 per FEU on June 1, surpassing the Red Sea crisis peak. Similarly, the Far East to US East Coast and Far East to North Europe trades are set to reach or exceed previous highs. The Far East to Mediterranean trade is also expected to witness an increase, with rates reaching US$6,175 per FEU on June 1.

The rise in spot rates is attributed to several factors, including ongoing conflict in the Red Sea, port congestion, and shippers frontloading imports. Sand explained that importers are shipping goods early, particularly for the Christmas period, to safeguard their supply chains. Efforts by carriers to manage diversions and re-align capacity have led to port congestion and rate increases on various trades.

Despite the challenges, there is a potential for slight easing, as the rate of increase in June is not as steep as in May. However, shippers face difficulties with cargo being rolled and new surcharges from freight forwarders. Carriers prioritizing higher-paying shippers exacerbate the situation, posing risks for those on long-term contracts. Sand suggests the pressure on shippers may intensify before improving.


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