Business, Freight News, Sea

Xeneta: Red Sea-related Rates Could Ease

[ February 8, 2024   //   ]

Ocean freight shipping rates are expected to increase further in February amid the ongoing Red Sea crisis, according to data from Xeneta, the ocean freight rate benchmarking platform.
However, there are signs that rates could begin to fall again following the Lunar New Year peak, the Oslo, Norway-based company said.
Xeneta’s projections are based on rates already received from customers for the first week in February. The company notes that, while the situation is volatile and subject to change, its data is the best indication of where the market is headed.
The biggest rate increase is expected in the Far East to U.S. East Coast, where Xeneta suggests a 17 percent increase to bring the average short-term rate to US$6,119 per 40-foot equivalent unit, effective Feb. 2, a 146 percent increase since the Red Sea crisis started in mid-December.
“Carriers are trying to readjust services to make up for the additional sailing time around the Cape of Good Hope. For example, they are cutting journeys short, missing port calls and increasing sailing speed,” said Peter Sand, Xeneta chief analyst.
“However, despite this, the early data from Xeneta suggests rates will continue to rise as we head into February.”
Other market projections by Xeneta are:
• Far East to Mediterranean average short-term rates are to increase 11 percent to US$6,507 per FEU, and a 243 percent increase since the Red Sea crisis escalated in mid-December.
• Far East to North Europe short-term rates are to rise 8 percent to a market average of US$5,106 per FEU; and a 235 percent increase since mid-December.
“The Red Sea crisis is causing a capacity issue rather than a demand issue, as we saw during the pandemic,” Sand said. “It is the massive uncertainty in the market which has brought imbalance and instability.
owever, he said, according to Xeneta customers, “carriers are now no longer offering the most expensive premium services which guarantee freight will be shipped during periods of extreme pressure on available capacity.
“This may suggest there is a waning demand for this level of service because the urgency is fading from the shipper side, or perhaps it is because capacity is available after all, despite the chaos caused by carriers pausing transits through the Suez Canal.”
Xeneta’s ocean freight rate benchmarking platform calls upon more than 400 million contracted container and air freight rates, and covers more than 160,000 ocean trade routes and more than 58,000 airport-airport connections.

Peter Sand, chief analyst, Xeneta