Overall, the ocean container market has settled into a new routine that avoids the Red Sea due to Houthi attacks which continued this week.
Though significant backlogs, congestion and equipment shortages seen during the first few weeks of the crisis have dissipated, adjustments have resulted in some moderate but ongoing disruptions.
Some West Mediterranean ports, for example, are now being used as transhipment hubs for East Mediterranean-bound containers, leading to some congestion there, and terminals in Colombo, Sri Lanka are also facing some backlogs as volumes have increased there for transhipment to the Middle East.
Some of the recent intra-Asia feeder service congestion is also being attributed to changes due to Red Sea diversions, though bad weather has also been a factor for some recent delays in the region.
And even though carriers are operating more vessels than usual on service loops that normally use the Suez Canal with the aim of accommodating longer voyages and maintaining weekly schedules, there are still fewer than normal weekly Asia-Europe sailings actually departing.
Taken together, these drains on capacity are seeing significant nominal fleet growth due to newly built vessels entering the market, but only moderate effective capacity growth, resulting in still-elevated freight rates.
Ocean rates out of Asia have been about level for the last four weeks, but at the US$4,/FEU mark from Asia to N. America’s East Coast and the Mediterranean, and about US$3,000 – US$3,/FEU to the West Coast and N. Europe, prices remain well above normal and are likely to increase relative to this new floor as demand increases during peak season.
Recovery efforts continued at the Port of Baltimore this week, where temporary channels let some trapped vessels exit the port, and accommodated the first container ship arrivals since the collapse. Officials expect to clear the Dali from the site by May 10th and restore full access for the largest container ships and other vessels by the end of the month.
In air cargo, Freightos Air Index China to N. America rates climbed to US$/kg last week, 54% higher than in early April when prices were easing somewhat, and to Europe rates increased to US$/kg, 30% higher than a month ago, likely reflecting continued pressure from B2C e-commerce volumes.
Middle East export rates which had been elevated since early in the year on increased sea-air demand due to Red Sea disruptions had eased somewhat by mid-April, possibly reflecting improvements in ocean logistics. In the last two weeks, though, prices have rebounded with N. America rates climbing 14% to US$/kg and rates to Europe increasing 30% to US$/kg, possibly reflecting impacts from a storm that flooded terminals in Dubai last week.
Red Sea-driven congestion and decreases in ocean capacity out of India have pushed air cargo demand up and export rates to twice as high as at the beginning of the year. But for the last month prices have leveled off at about US$/kg to N. America and US$/kg to Europe suggesting that some volumes are still being pushed to air, but that the worst in terms of disruptions to ocean logistics may be behind us.
This article was written by Judah Levine, Head of Research at Freightos
