Red Sea crisis to increase ocean freight rates
OCEAN freight shipping rates are set to rise further in February amid the Red Sea crisis.
Peter Sand, chief analyst at Xeneta, said: “Carriers are trying to readjust services to make up for the additional sailing time around the Cape of Good Hope. For example, they are cutting journeys short, missing port calls and increasing sailing speed.”
Xeneta, a leading ocean and air freight rate benchmarking and market analytics platform, predicts a continued surge in freight rates through February. Based on extensive crowdsourced data, the platform’s latest release forecasts an 11 percent increase in short-term rates from the Far East to the Mediterranean, reaching $6507 per forty-foot equivalent unit (FEU) by February 2 — a staggering 243 percent rise since mid-December.
Similar upticks are anticipated in other routes, with rates from the Far East to North Europe expected to climb by 8 percent and those to the US East Coast set to increase by 17 percent during the same period.
“The Red Sea crisis is causing a capacity issue rather than a demand issue, as we saw during the pandemic. It is the massive uncertainty in the market that has brought imbalance and instability. During times like this, you can only keep your cool if you are well-informed,” Sand said. “We are hearing from Xeneta customers that carriers are no longer offering the most expensive premium services that guarantee freight will be shipped during periods of extreme pressure on available capacity.”
Significantly, Xeneta’s data suggests a diminishing demand for premium services, indicating a potential easing of capacity constraints despite disruptions in Suez Canal transits.