Ocean freight rates spike at highest rate in 16 months

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Ocean freight rates spike at highest rate in 16 months
Image by Niklas from Pixabay
  • Ocean freight rates have risen to their highest rate in 16 months, according to Ti’s latest Ocean Freight Confidence Index
  • Headhaul rates is at 153.6 index points, up 173.8% in monetary terms against three months prior
  • The average cost of shipping a 40-foot container on major global headhauls increased from $1,411 in Nov 2023 to $3,864 at the start of February 2024
  • Global volumes rose by 1.2% in Q4 2023 compared to the previous quarter

Ocean freight rates have risen to their highest rate in 16 months, based on data from Transport Intelligence’s (Ti) latest Ocean Freight Confidence Index.

Headhaul rates is at 153.6 index points, up 173.8% in monetary terms compared to the previous three months.

The root of the increases can be traced to problems besetting the Red Sea and the Panama Canal.

The Red Sea crisis began in October, last year, when Houthi rebels inside Yemen began attacking commercial ships, an offshoot of the Israel-Hamas hostilities.

The Panama Canal, on the other hand, has been severely affected by the El Niño weather phenomenon. October 2023 was the driest month in recorded history for the canal basin, and doubts exist on its future capacity.

Ti said there is a potential for a “possibly quite violent downward shift in rates” if the disruptions in both areas are resolved, given the large number of ships plying the routes.

Industry sentiment for the first quarter of 2024 is swaying towards an overall increase in rates.

Most of the surveyed respondents expect the most significant rise to be on the Asia to Europe North West route.

The Ocean Freight Rate Outlook maps out expectations for the year ahead. This covers supplier disruption, consumer and business demand, shipping and logistics and overall shipping rates.

Ti runs a monthly survey of over 200 shippers and forwarders to determine the industry’s views on the trajectory of rates in the next quarter.

Overall, the general trend leans towards an increase in rates.