Ocean market analytics platform Xeneta has indicated that ocean freight shipping costs may rise further in early February as a result of the ongoing Red Sea crisis.
The Xeneta ocean freight rate benchmarking platform uses over 400 million crowdsourced data points, and the most recent prediction is based on prices previously received from clients for the first week in February.
While the situation remains volatile and prone to change, Xeneta recently disclosed data provides an indicator of where the market is heading.
From the Far East to the Mediterranean, market average short-term prices are expected to rise 11 per cent by 2 February to $6,507 per FEU. This is a 243 per cent increase since the Red Sea situation peaked in mid-December.
According to Xeneta, rates from the Far East to North Europe are expected to grow by 8 per cent by 2 February, with a market average of $5,106 per FEU. This represents a 235 per cent gain since mid-December.
The largest increase in rates occurs from the Far East to the US East Coast. On this trade, the recently disclosed data reveals a 17 per cent rise by 2 February, bringing the average short-term pricing to $6,119 per FEU. This is a 146 per cent rise from mid-December.
READ: Red Sea crisis sparks second-largest capacity drop since Ever Given
Peter Sand, Xeneta Chief Analyst, said: “Carriers are trying to readjust services to make up for the additional sailing time around the Cape of Good Hope. For example, they are cutting journeys short, missing port calls and increasing sailing speed. However, despite this, the early data from Xeneta suggests rates will continue to rise as we head into February.”
While the market is set to rise further, there are early signs of factors which could see rates begin to fall again following the Lunar New Year peak, according to the firm.
READ: Red Sea hostility triggers spark in shipping insurance
Sand added: “The Red Sea crisis is causing a capacity issue rather than a demand issue, as we saw during the pandemic. It is the massive uncertainty in the market which has brought imbalance and instability. During times like this you can only keep your cool if you are well informed.
“We are hearing from Xeneta customers that carriers are now no longer offering the most expensive premium services which guarantee freight will be shipped during periods of extreme pressure on available capacity.
“This may suggest there is a waning demand for this level of service because the urgency is fading from the shipper side, or perhaps it is because capacity is available after all, despite the chaos caused by carriers pausing transits through the Suez Canal.”
