Ocean freight rates are on an upward trajectory, influenced by a combination of global events. The Red Sea crisis, significant port congestion in the Middle East and Asia, a mismatch in container repositioning with a surplus of empty containers in Colombo and the Gulf region, and robust container demand are primary factors.
The Drewry Index has doubled year-over-year in the current calendar year. As of the week ending June 6, Drewry's composite index marked a 12% increase to $4,716 per 40 ft container, a 181% rise from the same period last year. Comparatively, this rate is 232% above the pre-pandemic average of 2019. Benchmark freight rates from Shanghai to various global destinations have also seen significant increases.
Drewry anticipates a further increase in freight rates from China due to the early peak season's onset. Indian research firm Prabhudas Lilladher notes that June 2024 spot rates have reached three to four times the levels of $6,000 to $10,000 per 40 ft container. Shipping companies, including Maersk, have adjusted their annual EBITDA guidance for CY24 upwards by 50-75%, attributing this to sustained container market demand and disruptions from the ongoing Red Sea crisis leading to more port congestion and higher freight rates. Maersk expects these developments to bolster financial performance in the latter half of 2024.
Source: indiashippingnews.com