In welcoming 2024 Netchem Inc has observed fluctuations in pricing and accessibility concerning shipping containers. We are committed to keeping you informed and ensuring seamless business operations amid these dynamic market changes.
The ongoing challenges stemming from the conflict in the Red Sea and Suez Canal crisis have had a significant impact to global freight rates and disrupted the availability of space and equipment. Carriers are compelled to present alternative options, involving extended transit times through different routes, resulting in heightened vessel congestion and a shortage of shipping containers for material transportation leading to a surge in ocean freight rates.
Market and Container update:
Companies are seeing limited choices for shipping and even those with long-term rate contracts may be forced onto the spot market due to high demand and carriers pushing for higher rates.1 Rates between the Far East and the US east coast increased by 45%.1
It is predicted that these spot rates will look cheap in a few weeks’ time, with some transpacific carriers rolling out new FAK (freight all kinds) rates, effective from 15 January of $5,000 per 40ft for the US west coast and $7,000 for east and Gulf coast ports.”1
Analytics firm Drewry provided its first report of 2024 on its closely watched World Container Index and to no surprise rates have skyrocketed. In one week, Drewey calculates the composite index is up by two-thirds (61 percent) per 40-foot container and stands 25 percent above the end of 2022/start of 2023.2
This is the most significant supply chain disruption since the COVID-19 pandemic. Notably, the canal, a vital maritime route, handles around 12% of global container traffic.3 Many major carriers have reported that they are re-routing vessels, adding upwards of 20 days for travel time3. The disruption to the canal comes as we head into the Chinese New Year, which is already a busy time historically, with limited equipment and space availability in the market as importers and suppliers rush to ship their freight before the holiday.
Rest assured, Netchem remains committed to navigating these changes, ensuring your continued confidence in an evolving freight landscape.
1 Goldstone, C. (2024, January 11). Shippers must pay a heavy price for capacity, as ‘ships are filling up’. The LoadStar. [source]
2 Executive, M. (2024, January 4). Repercussions of Red Sea Turmoil Mount as Box Rates Jump 60% in One Week. The Martime Executive. [source]
3 Waldersee, V., Ringstrom, A., & Mannes, M. (2024, January 12). Tesla, Volvo Car pause output as Red Sea shipping crisis deepens. Reuters. [source]