To more accurately assess this impact, Sea-Intelligence compared the relationship between sailing distance and rates, using cents per FFE per nautical mile as a measure. The analysis shows that during the epidemic, freight rates per nautical mile reached abnormally high levels.
Based on this historical data, Sea-Intelligence has estimated the possible spot freight rates per FFE as the current crisis continues, combined with the new sailing distances. The results show that if the rates per nautical mile reach the levels during the epidemic, the spot freight rate from Shanghai to Rotterdam may be as high as US$18,900/FFE, the freight rate from Shanghai to Genoa may reach US$21,600/FFE, and the return freight rate from Rotterdam to Shanghai may reach US$2,200/FFE.
Alan Murphy, CEO of Sea-Intelligence, said that this does not mean that freight rates will not rise again, but if the rate per nautical mile remains the same as during the epidemic, then the spot freight rate may reach the above level. This forecast is undoubtedly a severe challenge for shippers.
Lars Barstad, CEO of shipping company Frontline, said on Wednesday that although the ceasefire in the Israeli-Palestinian conflict may end the threat of attacks on ships by the Houthi armed forces in Yemen, shipping companies are unlikely to resume routes in the Red Sea immediately. He stressed that there is no conclusive evidence that the Houthi armed forces in Yemen will stop their attacks after the ceasefire in the conflict, so it is unrealistic to expect shipping companies to quickly cross the Red Sea or the Gulf of Aden.
Since November last year, the Houthi armed forces in Yemen have forced shipping companies to choose to bypass the Cape of Good Hope in Africa, which has not only significantly increased shipping costs, but also driven up the share prices of shipping companies. Although, after the United Nations adopted a ceasefire resolution in the Gaza Strip on Monday, the share prices of major companies in the container shipping industry have fallen, among which Maersk and Hapag-Lloyd's share prices have fallen by 6% since Monday.
Shipping industry experts warned about the outlook for spot freight rates at the TOC Europe 2024 conference this week. Spot freight rates are expected to rise further due to a surge in demand caused by the Red Sea crisis, port congestion and the threat of a tariff war, said Peter Sand, chief analyst at Xeneta. Although concerns about a pandemic-like surge in demand may prompt shippers to act early, the expected freight rate increase in mid-June may be relatively small, but it still poses a considerable challenge for shippers.
On the other hand, Lars Jensen, CEO of Vespucci Maritime, said that container trade has returned to pandemic levels. Currently, there is severe congestion in Singapore and Western Mediterranean ports, similar to the pandemic period. The surge in ship leasing costs shows that carriers and shipowners expect the problem to continue. Independent carriers have begun operating small ships to provide additional capacity due to rising freight rates. Regarding the Red Sea crisis, Jensen believes that its duration is uncertain, but if demand continues to be strong, rates may exceed pandemic levels.
At the same time, the shipping market continues to show an upward trend. Maersk issued an announcement, announcing an increase in FAK rates on the Asia-Europe route, up to US$9,400/FEU. This adjustment officially takes effect on July 1. The market generally expects that other leading shipping companies will follow suit and take similar rate adjustment measures. We will wait and see to observe the further development of this trend.
