Home > 2024 > Red Sea Crisis Causing Container Spot Rates Sky-Rocket

Red Sea Crisis Causing Container Spot Rates Sky-Rocket

Red Sea Crisis Causing Container Spot Rates Sky-Rocket

The global shipping market has now accepted that containerships will not be returning to the Red Sea anytime soon. Extensive detours around the Cape of Good Hope have significantly raised spot container rates, surpassing pre-Covid crisis levels and continuing to rise. Coalition air strikes in Yemen were followed by more attacks on shipping.

The Drewry World Container Index (WCI) Global Composite surged to US$3,777 per FEU, marking a 173 per cent year-to-date increase. Except for the Covid crisis boom period from December 2020 to October 2022, this week’s global spot-rate reading is the highest recorded since the WCI’s debut in June 2011.

Despite predictions of a challenging year for container lines due to a wave of new building deliveries, with 2.3 million TEU of new capacity delivered last year and an additional 3.2 million TEU expected in 2024, ocean shipping rates are now highly influenced by geopolitical events.

The air strikes causing containerships to reroute around Africa’s Cape of Good Hope, have altered the supply-demand dynamics and many are now anticipating windfall earnings for carriers in Q1 2024 as they leverage the situation to their benefit.

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