The latest updates for the International Freight Market
Overview
Freight rates peaked in late January and have started declining as demand eases post-Chinese New Year with new ships introducing additional capacity.
Carriers continue to avoid the Red Sea due to the ongoing disruptions.
Houthi rebels continue attacks on vessels transiting the Red Sea, with at least 57 attacks on commercial and military ships in the Red Sea and Gulf of Aden since 19 November 2023, increasing toward the latter half of February.
Asset imbalances and equipment shortages from trade flow blockages continue to create challenges for shippers as trade volumes going through the Suez Canal and Panama Canal have decreased by 42% and 49% respectively.
Rates
Drewry’s composite World Container Index (WCI) has decreased steadily in the past four weeks to $3,659 per 40ft container as of 22 February 2024, after reaching a high of $3,964 per 40ft container on 25 January 2024 for eight consecutive weekly gains.
Despite the recent reductions, rate levels remain up by 164.4% in the past three months since the seizure of Nippon Yuesn’s the Galaxy Leader at which time the WCI was $1,384 per 40ft.
Rate levels are up by 93%, compared to the same period in 2023.
The latest Drewry WCI composite index of $3,964 per 40ft container has reached its highest since October 2022 and is 158% more than the 2019 average (pre-pandemic) rate of $1,420.
Panama Canal
After the Panama Canal Authority (PCA) increased the allowance to 24 vessels from January 2024 onwards, the PCA has confirmed that there will be no further restrictions until at least the end of the dry season in April.
If rains arrive in May as expected, the PCA plans to gradually increase daily slots, with the aim to return to approximately 36 vessels per day, the average during the rainy season. However, if rain is less than expected, the PCA could apply further restrictions to either daily passage or draft.
Red Sea
Carriers continue to avoid the Red Sea due to the ongoing disruptions. Freight rates peaked in late January and have started to decline as demand eases post-Chinese New Year, with new ships introduced to add capacity.
Houthi rebels continue attacks on vessels transiting the Red Sea, with at least 57 attacks on commercial and military ships in the Red Sea and Gulf of Aden since 19 November 2023, increasing toward the latter half of February. An environmental disaster has also unfolded as the result of a Houthi attack on bulk carrier Rubymar on 18 February 2024. The crew were forced to abandon the vessel after the attack which caused a 29km oil slick. The US military warned of the danger of a spill from the vessel’s cargo of more than 41,000 tons of fertiliser.
The US and UK, with the support of a wider coalition group including Australia, Bahrain, Canada, Denmark, the Netherlands, and New Zealand, continue attacks on Iran-backed Houthi targets in Yemen.
By the first half of February 2024, container tonnage crossing the Suez Canal had fallen by 82%. The drop in transits reflects the response by many shipping companies to the new security threat. Many have opted to divert ships to alternative routes, notably around the Cape of Good Hope. Ship tonnage entering the Gulf of Eden declined by over 70% between December 2023 and February 2024. Meanwhile, vessel tonnage passing through the Cape of Good Hope increased by 60%. By 18 February 2024, 621 container ships have been rerouted through the Cape of Good Hope.
It is reported that the trade volumes going through the Suez Canal and Panama Canal have decreased by 42% and 49% respectively.
