Asia Europe international sea freight prices are skyrocketing!

The latest attack by the Housai armed forces once again shows that their actions pose significant risks to international shipping. The London insurance market has classified the waters in the southern part of the Red Sea as high-risk areas, and commercial ships need to inform insurers in advance and purchase war insurance to pass through.A large amount of trade between Asia and Europe is conducted through the waters of the Red Sea, and its security situation is highly concerned. Analysts believe that the carrier’s main choice is to detour around the Cape of Good Hope, which requires up to 10 days of navigation time for routes from Asia to Northern Europe and the Eastern Mediterranean. In addition, the cost of sea transportation has sharply increased, and based on the scale and duration of the Suez Canal interruption, it is expected that sea freight rates will increase by up to 100%.The escalating tension in the Red Sea and its surrounding waters will seriously impact international shipping and supply chains, increase transportation and safety costs for goods, and raise commodity prices. If the Red Sea is blocked by the Hussain armed forces, it will have a significant impact on the Western economy and global supply chain.The risk of conflict spillover has intensified between Palestine and Israel, and as the Red Sea situation continues to tense, the intervention of the US military may also increase. The most dangerous situation is the outbreak of a full-scale regional war, involving both the countries in the region and the United States. According to Russian media reports on the 17th, the United States is considering cracking down on the Hussein armed forces, raising concerns that the risk of war escalating is on the rise.sea freightSoaring sea freight pricesAffected by this, coupled with the drought restrictions on the Panama Canal and the reduction of shipping schedules by shipping companies, the SCFI container freight index has risen in response, achieving three consecutive increases! The latest Shanghai Container Export Freight Index (SCFI) rose 61.31 points to 1093.52 points, with a weekly increase expanding to 5.94%. The four major ocean routes have all seen a comprehensive increase, with a record breaking increase for this year.Among the four major ocean routes, except for the West Coast, the increase exceeded 10%, with the European route returning to a thousand yuan and the East Coast experiencing the largest increase. Specifically, the freight rates for Europe and the Mediterranean routes have risen sharply for two consecutive weeks, with increases of 11.2% and 13.1% respectively in this period. The freight rates for the US West have increased by 9%, while those for the US East have risen by 14.9%.The latest Deloitte World Container Freight Index (WCI) has risen by 4%, with freight rates from Shanghai to Europe and the Mediterranean increasing by 7% and 6% respectively.The price increase plan launched by the relevant shipping companies on December 15th has been implemented as scheduled, with an increase of approximately 24% to 33%; A freight forwarder pointed out that in the past, when the market was not good, shipping companies were worried that their income would be too low to survive, so they had to bargain for goods. Now, shipping companies have made a lot of money after three years of the epidemic, so they have increased their freight rates by significantly reducing flights. It is estimated that about 40% of flights have been reduced in the West Coast of the United States, while the East Coast of the United States has automatically achieved the effect of reducing flights due to long queue times on the Panama Canal, with some ships bypassing the Suez Canal and even the Cape of Good Hope.Industry insiders predict that unlike previous short-term price increases, this increase in freight rates may last for a longer period of time and will not quickly fall back. If the price increase does not last long enough, another wave of price increases may occur on January 1st. Due to the impact of high freight rates during the epidemic, the appetite of shipping companies has increased. Before the epidemic, each price increase was usually only $200 to $300, but now it is often called a thousand yuan increase, and the actual increase is $3-600.Industry insiders in the freight forwarding industry pointed out that the shipping company showed a firm attitude in the price increase on the 15th, but there were differences in actual implementation. Taking the US West Coast route as an example, the price difference of the price increase reaches $300. This indicates that some shipping companies are attempting to take advantage of this price increase opportunity to obtain more cargo at a price lower than most of their competitors in the same industry. However, it remains to be observed whether this approach will affect subsequent freight rates.However, there is a possibility of another price increase in early January, and the European line is most likely to experience another price increase, firstly due to the current situation in the Red Sea, and secondly because the shipping effect of the European market is much higher than that of the US line before the Lunar New Year. Therefore, after raising the freight rate to $2000 per large container this time, the European line has announced a goal of increasing it to $3000 in January.It is worth noting that multiple shipping companies (Maersk, DaFei, Herbert), including MSC, which just announced the price increase, will once again significantly increase the FAK rates for Asia to Nordic and Mediterranean routes on January 1, 2024. The increase is 20-50% from December 15th.The latest SCFI fare index released:Europe: Although there are signs of stabilization in the economic outlook of the eurozone, it still faces the challenge of high inflation, and the future of the economy will still be tested. In this context, transportation demand remains stable, and capacity investment continues to be regulated during the signing season, resulting in a significant increase in market freight rates.The freight rate for the Far East to Europe route is $1092/TEU, an increase of $104 or 11.24% compared to the previous period;The fare for the Far East to Mediterranean route is $1569/TEU, an increase of $182 or 13.12% compared to the previous period.United States: Although there have been signs of a slowdown in the US job market in the early stages, data shows that it still has some resilience, which supports the demand for North American shipping routes. This week, transportation demand remained stable and improved, with stable supply and demand fundamentals and an increase in market freight rates.The freight rate from the Far East to the West United States is $1819/FEU, an increase of $150 or 8.99% compared to the previous period;The freight rate from Far East to East America is $2805/FEU, a significant increase of $364 or 14.91% compared to the previous period.The freight rate per container on the Australia New Zealand route (Melbourne) is $916, a weekly increase of $1, or 0.11%.The South American route (Santos) has a freight rate of $2329 per container, a weekly decrease of $154, or 6.04%.In terms of offshore routes, each TEU from Far East to Kansai and Kanto in Japan has decreased by $2 compared to the previous week, with quotes of $299 and $307 respectively; South Korea’s per TEU remained unchanged from last week at $137. The Southeast Asian line (Singapore) charges a freight rate of $202 per box, up $2 per week or 1%.The latest published Deloitte WCI freight index:The latest Deloitte World Container Composite Index rose by 4%, with all routes experiencing a comprehensive increase. The shipping cost from Shanghai to Rotterdam has increased by 7%, from $99 to $1442/FEU,; The shipping cost from Shanghai to Genoa has increased by 6% to 89 USD 1697 USD/FEU. Similarly, the freight rate from Shanghai to New York has increased by 4% to $104, reaching $2851/FEU. The freight rate from Shanghai to Los Angeles has increased by 2% to $46, reaching $1985/FEU.Deloitte predicts that spot rates on the east-west route will generally remain close to current levels in the coming weeks.

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