Story By Andreas Exarheas | RigZone | In a release sent to Rigzone late Tuesday, Xeneta said its latest data forecasts ocean freight shipping rates are set to rise further in February.
“Early indications suggest ocean freight shipping rates are set to increase further in early February amid the ongoing Red Sea crisis, according to data released by Xeneta today,” the company, which describes itself as the leading ocean freight shipping rate benchmarking and intelligence platform, stated in the release.
Xeneta’s ocean freight rate benchmarking platform calls upon more than 400 million crowdsourced data points and the latest projection is based on rates already received from customers for the first week in February, the company said in the release.
“While the situation remains volatile and subject to change, the newly released data is the best indication of where the market is headed,” Xeneta added.
From the Far East to the Mediterranean, market average short-term rates are set to increase 11 percent by February 2 to stand at $6507 per FEU, according to Xeneta, which noted that this is an increase of 243 percent since the Red Sea crisis escalated in mid-December.
Rates from the Far East to North Europe are set to rise by eight percent by February 2, with a market average of $5106 per FEU, Xeneta said in the release. The company highlighted that this is an increase of 235 percent since mid-December.
The biggest increase in rates is from the Far East into the U.S. East Coast, Xeneta pointed out in the release. On this trade, the newly released data suggests an increase of 17 percent by February 2 to bring the average short-term rate up to $6119 per FEU, Xeneta stated, adding that this is an increase of 146 percent since mid-December.
“Carriers are trying to readjust services to make up for the additional sailing time around the Cape of Good Hope,” Xeneta Chief Analyst Peter Sand said in the release.
“For example, they are cutting journeys short, missing port calls, and increasing sailing speed,” he added.
“However, despite this, the early data from Xeneta suggests rates will continue to rise as we head into February,” he continued.
The Red Sea crisis is causing a capacity issue rather than a demand issue, as we saw during the pandemic, Sand stated.
“It is the massive uncertainty in the market which has brought imbalance and instability. During times like this you can only keep your cool if you are well-informed,” he added.
“We are hearing from Xeneta customers that carriers are now no longer offering the most expensive premium services which guarantee freight will be shipped during periods of extreme pressure on available capacity,” he continued.
“This may suggest there is a waning demand for this level of service because the urgency is fading from the shipper side, or perhaps it is because capacity is available after all, despite the chaos caused by carriers pausing transits through the Suez Canal,” he went on to state.
Heightened Tensions
In a release posted on its website on January 12, Xeneta noted that missile strikes by the U.S. and UK against Houthi militia in Yemen “brought heightened tensions across the region, with disruption to ocean freight shipping set to deteriorate further”.
In that release, Sand said, “We want to see safe, risk-free voyages through the area for vessels and the situation must calm down for that to happen”.
“There is never a straight line to a resolution and perhaps the missile strikes in Yemen by the U.S. and UK is the beginning of the endgame in this crisis, but, short term, things will get worse before they get better for ocean freight supply chains,” he added.
Xeneta warned in that release that its latest data showed ocean freight shipping rates from the Far East to the Mediterranean and North Europe were set to hit 200 percent increases since mid-December in the next seven days.
“Vessels are already avoiding the area due to the Houthi attacks and the U.S. and UK missile strikes are unlikely to change that. The longer this crisis goes on, the more disruption it will cause to ocean freight shipping across the globe and costs will continue to rise,” Sand said in that release.
“This means goods being delayed, or not arriving at all, and rising prices for the end consumer,” he added.
“Tension in the Middle East is nothing new and there has always been a level of risk for ocean freight shipping. You cannot rule anything out, but it is unlikely we will see escalations of this kind in the Strait of Hormuz,” Sand continued.
“But we are looking at months rather than weeks or days before this crisis reaches any kind of resolution,” Sand warned.
To contact the author, email andreas.exarheas@rigzone.com
