Image: Maersk
The maritime shipping industry has been grappling with significant challenges throughout 2023, contending with a confluence of factors including diminishing demand, rising overcapacity, and ongoing economic uncertainties. However, recent developments reveal a glimmer of hope as spot rates for containerized ocean freight experience a remarkable upswing on three pivotal Far East export corridors. Oslo’s Xeneta, a trusted source for shipping insights, has reported that this surge in rates follows the implementation of General Rate Increases (GRIs) by carriers, offering a welcome respite to a sector that has been grappling with adversity.
According to Peter Sand, Chief Analyst at Xeneta, this upward trajectory is a significant departure from the protracted decline in ocean freight rates that has persisted since the previous summer. He underscores that carriers have employed GRIs in an attempt to regain control and counteract the downward slide. However, the effectiveness of such measures has been limited until now. The latest GRIs, executed in August, have yielded a notable reversal of this trend on vital trade lanes, including the Far East to US West Coast, Far East to North Europe, and Far East to Mediterranean routes.
Among these corridors, the Far East to North Europe trade lane has experienced the most dramatic increase, with rates surging by USD 500 since late July. This represents a remarkable 39.6% hike from the rates that had lingered below USD 1500 per FEU (forty-foot equivalent unit) since May. This surge has narrowed the price gap between this route and the relatively more expensive Far East to Mediterranean lane to just USD 670, the closest it has been throughout the year.
In a separate development, the Far East to US West Coast corridor has seen a more gradual but impactful climb, with average spot rates rising by 51.5% since the end of June. The increase of USD 470 from July 1st to August 1st underscores a notable resurgence on this route.
As carriers prepare for peak season and forthcoming contract tenders, the industry is on the precipice of a pivotal juncture. The effectiveness of these short-term rate hikes and their potential to translate into sustained gains are subjects of keen interest. Industry stakeholders, particularly shippers and carriers, are closely monitoring the evolving situation. The looming question is whether this resurgence signifies a true turning point or a fleeting anomaly in the context of broader market dynamics.
Peter Sand emphasizes that the implications of these developments will become clearer with time and in-depth data analysis. As the industry navigates uncertain waters, the coming months will shed light on the endurance of these rate increases and their impact on the sector’s future trajectory.
Source: Xeneta
