 Rates ex-China set to hit five figures ?high street prices will rise, warning |
Source |
American Shipper |
Post Date |
06/13/2024 |
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There were further double-digit increases in container freight rates this week, after a series of general rate increases and other surges came into effect on 1 June, a day or two after last week? indices were published.
Drewry? World Container Index (WCI) recorded week-on-weeks gains of 14%, 17% and 11% on its Shanghai-Rotterdam, Shanghai-Genoa and Shanghai-Los Angeles routes, respectively.
?rewry expects freight rates ex-China to continue rising next week, due to the onset of the early peak season,?the analyst said.
And European freight forwarders are warning that spot rates from Asia would breach the five-figure mark next month. One told The Loadstar: ?s anticipated, rates from 1 July are breaching the $10,000 per 40ft barrier, and several carriers?online pricing platforms already reflect this.?
According to a report by the BBC this week, the rate surge is ning to bleed through into retail prices on the high street, driving them up.
Whether rates remain at this elevated level will most likely dep on how long demand persists.
?f the demand increase is the early start of the peak season, we can expect demand-side pressure to subside in a few months, and earlier than usual,?said Freightos head analyst Judah Levine.
?ust as rates climbed on a combination of pre-lunar new year demand, and restricted capacity in the first months of the diversions and subsided once demand eased, prices and disruptions should decrease when peak season slows this time as well, although until Red Sea traffic resumes, we can expect rates to fall no lower than their April floor,?he added.
Meanwhile, the growing scarcity of equipment at Asian export hubs has led to a container price bubble, according to box trading platform Container xChange.
Container xChange founder and CEO Christian Roeloffs said the causes of higher container prices were the same as those that had propelled the recent spot freight rate surge, and added they could fall just as quickly.
?s we monitor the market closely, it? evident that the current spike in container prices is not sustainable in the long term, as it is not backed by strong underlying demand.
?oncerns over labour markets and high interest rates imply that consumers are likely to reduce sping, which could lead to a decline in demand for goods and, consequently, a reduction in shipping volumes in the near term ?unless the demand revival becomes stronger and the supply capacity soak-up intensifies.
?s the initial rush to restock inventories subsides and the real demand from consumers and businesses remains flat, we anticipate a stabilisation of, or even a decline in, container prices in the mid-term; the market is showing signs of volatility driven by short-term factors, rather than a sustained increase in demand,?he added.
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