On May 14, 2024, analysis firm Xeneta released its findings and predictions on the trend of spot rates for container shipping, aligning closely with other analysts. The Norwegian company noted that while rates continue to rise through mid-June, the increase is less pronounced compared to May and early June.
In Europe, average spot rates from the Far East to Northern European ports have risen by ten percent compared to the previous week, reaching $6,357 per FEU (up 20% on June 1), while those to the Mediterranean have exceeded $7,000 per FEU (up 7.2%), compared to 19% on June 1.
“The market is still growing, and some shippers face the prospect of not being able to ship containers under existing long-term contracts and having their cargo sent back,” explains Peter Sand, Chief Analyst at Xeneta. He adds, “Any signs of a slowdown in the growth of spot rates will be welcomed by shippers, but the situation remains extremely challenging and is likely to continue to be so.”
Xeneta reports that since mid-December 2023, before the Red Sea crisis erupted, average spot rates from the Far East have increased by 276% to the US West Coast and by 316% to Northern Europe. “These are significant financial blows that shippers have to absorb,” notes Peter Sand.
The pressure on the entire container shipping system remains high not only due to the Red Sea crisis but also because of port congestion in the Mediterranean and Asia and a shortage of containers. These factors drive shippers to advance shipments ahead of the peak season in the third quarter. In the US, the failure of port worker negotiations, potentially leading to strikes, adds to the pressure.
Peter Sand also points out: “We must also consider the potential impact that rising spot container shipping rates could have on inflation in the US and Europe, should these rising costs ultimately be passed on to consumers.” However, Xeneta believes it is unlikely (though not impossible) that rates will reach the levels seen during the pandemic.
Forecasts remain very challenging due to the numerous factors at play. “For instance, any potential ceasefire between Israel and Hamas could change the outlook entirely if it helps end attacks on container ships by Houthi militias and leads to a broad return of carriers to the Red Sea region,” concludes Peter Sand.
