Shipping company: I'm surprised the freight rate has gone up so much!
CCTV finance reported that international and shipping prices have soared recently, and the industry expects that freight rates in June will rise further, and may even exceed the level at the beginning of this year, which is the worst period of the Red Sea shipping crisis.
Shipping company: I'm surprised at the rate increase
Rolf Habben Jansen, Hapag-Lloyd's chief executive, was taken aback by the sudden rise in container rates in recent weeks.
He told shipping outlet ShippingWatch: "To be honest, I am also surprised by the rate increase. We've seen very strong demand over the last few weeks, but what the reason is, we can only guess. "
Rolf Habben Jansen could not give a definitive reason for the sudden surge in demand and freight rates. He also doesn't see anything unusual about demand, saying he shouldn't get too excited about the strong demand seen in the past few weeks, saying the trend has been normal this year and now we have to see how it develops in the next few weeks.
However, Rolf Habben Jansen does not believe that the Red Sea crisis is the main reason for the sudden increase in container rates, as there was an initial increase after the Red Sea crisis, but then it normalized. The surge in demand over the past few weeks will certainly push up spot rates. He attributed the increase in demand to nervous shippers.
Some analysts pointed out that corporate nervousness may be part of the reason for the sudden surge in freight rates.
Houthi attacks on ships in the Red Sea forced shipping companies to make a detour, leading to severe delays. That could prompt more shippers to start ordering goods now for the Christmas shopping season, leading to an unexpected surge in demand for sea freight.
Rates will continue to rise in June
Because of the current global container capacity constraints, international spot shipping prices have soared recently, up about 30% in the past few weeks.
Specifically, data from Xeneta, a shipping comparison platform, shows that tensions in the Red Sea triggered a sharp rise in shipping costs at the beginning of this year, which has since fallen, but there were two waves of increases in late April and mid-May this year, compared with the end of April. Spot rates for 40-foot containers shipped from East Asia to U.S. ports on the east and west coasts rose by an average of $1,500.
Xeneta said that the increase in fees indicates that the spot shipping market is picking up, and sees a trend that the spread between spot and long-term freight rates is widening.
In contrast, it can be found that the volatility of long-term contract freight is small, and there is no surge in spot freight volume. The difference between the two is now more than $2,500.
When the freight gap is large, shipping companies are more inclined to prioritize the allocation of capacity to spot goods, hoping to obtain higher revenue. This can also lead to long-term delays in the transportation of goods
Regarding the latest wave of spot shipping price increases, the main reason is the shortage of containers. As shipping companies avoid the Red Sea and bypass the Cape of Good Hope in Africa, containers spend longer at sea, unable to reload their cargo in time.
In addition, Delury data shows that in the five weeks from May 13 to June 16, 2024, the main east-west main routes - trans-Pacific, Trans-Atlantic and Asia-Nordic and Mediterranean routes - have announced 44 cancellations, a total of 7% of the planned 653 flights, which could further push up rates.
The positive demand side of shipping has also promoted the price increase, mainly reflected in two aspects:
First, the European and American macroeconomic data marginal improvement, according to the previously announced eurozone ZEW economic climate index in April recorded 43.9, a new high of nearly 26 months, the United States also ended the continuous one and a half years of destocking cycle began to restock;
Second, due to the impact of detour caused by the lengthening of transportation time, superimposed on the expectation of the rise in freight prices in the peak season, the shippers prepare goods in advance. It is reported that the Far East to Europe route detour will drive the global container mile transport demand growth of 5.27%.
Meanwhile, there are signs that the peak season is already several months earlier than usual.
The peak shipping season usually runs from June to September, but analysts say a number of potential disruptions have prompted retailers to move earlier this year, with some companies fearing post-contract strikes at U.S. East Coast and Gulf Coast ports this fall.
To ensure seasonal goods arrive early or on time, American companies are ordering holiday and return products in advance.
In addition, extreme weather has led to extended sailing times, and in order to reach the final destination on time, some ships may choose to skip some intermediate ports, resulting in empty containers unable to return to the export port in time, and progress has affected the supply of containers.
It is worth noting that two major shipping giants Maersk and Hapag-Lloyd also raised their guidance for the year this month, and the CEO of DHL Express 'U.S. unit told CNBC that the transportation industry may face increased demand and insufficient supply challenges this year, and said that it has started early to prepare for the peak season.
Xeneta, a shipping comparison platform, warned that freight rates could rise further in early June, and that prices for spot shipping from the Far East to the US west coast could surpass levels seen at the height of the Red Sea crisis earlier this year. Eventually, higher freight rates could also affect consumer prices.
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