Ocean Freight Container Shipping Market Peaks As Spot Rates Show Signs Of Easing
The dramatic surge in ocean freight container shipping rates appears to be reaching its peak, with importers increasingly resisting the skyrocketing spot rates. According to data released by Xeneta, average spot rates from the Far East to the US East Coast increased by 3.7% on July 15, reaching US$ 10,045 per FEU (40ft equivalent unit). Rates to the US West Coast rose by 2.0%, standing at US$ 8,045 per FEU.
This marks a nearly 150% increase in spot rates for these trades since late April. However, the latest increases are significantly smaller compared to the 22% rise into the US East Coast and 12% rise into the US West Coast observed on July 1.
Emily Stausbøll, Xeneta Senior Shipping Analyst, noted that while some carriers continue to push for higher spot rates, others are beginning to offer lower rates. This shift suggests a growing availability of shipping capacity, allowing shippers to negotiate better terms and reducing their reliance on the highest spot rates to secure space.
The market appears to have reached a peak, as indicated by Xeneta’s ‘mid-high’ data, which shows that the highest spot rates have remained relatively stable throughout July. This stability suggests that shippers are no longer forced to pay premium rates to ensure transportation.
Spot rates for fronthaul trades from the Far East to North Europe and the Mediterranean also reached a peak, with increases of 4.7% and 3.5% on July 15, bringing rates to US$ 8,480 per FEU and US$ 8,150 per FEU, respectively. These increases are smaller than the 17% and 10% rises observed on July 1.
Stausbøll highlighted that while the signs of a peak are promising for shippers who have been grappling with exorbitant rates, the situation remains challenging. Port congestion is easing, more shipping capacity is becoming available, and the traditionally busy Q3 peak season may be less intense due to earlier frontloading of imports.
Despite these positive developments, spot rates remain elevated, with increases of nearly 400% for the US West Coast, over 300% for the US East Coast, and 455% for North Europe since mid-December 2023. The primary driver of this spike is the ongoing conflict in the Red Sea, which has forced ships to detour around the Cape of Good Hope. Unless there is a significant return of vessels to the Suez Canal, the situation is unlikely to fully resolve.
Overall, while the market may be reaching a peak, shippers continue to face high costs, and a significant decrease in spot rates will depend on broader changes in global shipping dynamics.
