Container spot freight rates on the major east-west trades showed signs of stabilising this week as carriers continued to inject additional capacity into the market, according to the latest weekly market update from Xeneta.
While freight rates remain at exceptionally high levels following the Strait of Hormuz crisis, Xeneta said the pace of increases has slowed and upcoming mid-July rate hikes are expected to be more moderate than those seen at the beginning of the month.
“It is still a very challenging market, but there is a faint glimmer of light at the end of the tunnel for shippers after spot rates remained essentially flat on major trades out of the Far East this week and carriers continue to increase offered capacity,” said Peter Sand, Chief Analyst at Xeneta.
Market data for 10 July showed spot rates from the Far East to the US West Coast edging down 0.1% week-on-week to US$7,069 per FEU, while rates to the US East Coast increased 0.3% to US$8,808 per FEU. Rates to North Europe slipped 0.2% to US$5,503 per FEU, and Far East-Mediterranean rates fell 0.9% to US$6,855 per FEU.
Despite the recent stabilisation, rates remain significantly above pre-crisis levels. Compared with the end of February, spot rates have surged 276% on the Far East-US West Coast trade, 232% to the US East Coast, 148% to North Europe and 106% to the Mediterranean.
Xeneta attributed the easing in market pressure to continued capacity growth. Offered capacity increased 5.5% week-on-week on the Far East-US West Coast trade, 6.2% to the US East Coast and 3.1% to North Europe.
“What has changed is the supply side,” Sand said. “That sustained capacity injection appears to be having an effect, easing some of the pressure and helping shippers to move goods more reliably, even if it is not yet translating into lower rates.”
Looking ahead, Xeneta expects the market to remain volatile as the traditional peak shipping season begins and container shipping through the Strait of Hormuz remains disrupted.
“We are at the beginning of the traditional peak season and the Strait of Hormuz remains effectively closed to container shipping,” Sand added. “The market has paused for breath – and for shippers who have endured months of spiralling costs, that is at least a small piece of welcome news – for as long as it lasts.”
