Drewry's World Container Composite Index rose 16% this week to $4,072 per box, maintaining significant growth throughout May and pushing container traffic back to the all-time highs of the COVID-19 era at the beginning of this century.
Supply constraints due to the diversion of the Red Sea, coupled with healthy demand trends in several regions, have prompted an early start to the peak season, causing freight rates on major east-west routes to jump this month to their highest levels since September 2022. The recent boom has affected nearly all shipping routes and spread into Latin America, Africa and within Asia.
"We are entering pandemic-level territory," Lars Jensen, founder of container consultancy Vespucci Maritime, wrote on LinkedIn yesterday, noting that only during the COVID-19 pandemic , liner shipping has only experienced similar extreme growth in three weeks.
Analysts at investment bank Jefferies wrote in a recent note to clients: "The current market dynamics bear some resemblance to the 2021/2022 period, when a sudden surge in demand led to capacity constraints and then to capacity constraints. Shortages led to capacity congestion, and then spot freight rates reached record levels. "The year started with a sudden change in trade patterns, which led to capacity constraints, and now has led to capacity shortages, but the current congestion level remains moderate," they added. Things are likely to change as shippers/retailers scramble to book available cargo; meanwhile, spot rates are already at historically high levels, except for the record period in 2021/2022.”
Another key spot index released today, the Shanghai Container Freight Index (SCFI), climbed 7.25% this week to 2703.43 points, the highest point since September 2022.
Judah Levine, head of research at container booking platform Freightos, noted: “With Europe likely to start a replenishment cycle and North American importers moving peak season demand forward due to concerns about labor or Red Sea shipping disruptions later this year, "The unseasonal growth in shipping demand in Asia is putting additional pressure on the container market, which is already strained by the relocation of Red Sea routes."
A new report from British consultancy Maritime Strategies International (MSI) states: "General rate increases (GRIs) by major liners on 1 and 15 April and May 15 have also contributed to the surge in spot rates." Another led to Factors contributing to the surge in the MSI index were bad weather at Chinese ports this month.
