Is Ocean Freight Inflation Cooling?
The freight inflation that has resulted from Houthi terrorist attacks on ships in the Red Sea may soon be over, according to CNBC.
What’s going on: “Shipping rates on ocean routes from Asia to the U.S. are beginning to decline, based on analysis of the latest cargo data from Xeneta, a leading ocean and air freight benchmarking platform. Europe and the Mediterranean rates had already started to decline at the end of January.”
- American shippers have experienced ocean freight rates from the Far East to the U.S. increase from 146% on the East Coast to 186% on the West Coast.
- Container rates for the latter route dipped to $4,680 from $4,730 from Feb. 1 to Feb. 15, according to Xeneta.
- In the same period, container rates for 40-foot containers edged down to $6,100 from $6,260.
Ongoing attacks: Despite the price decreases, attacks on commercial vessels worldwide continue full force.
- “Most recently, the United Kingdom Maritime Trade Operation said a bulk carrier was attacked by rocket fire off the coast of Aden, Yemen, with the ship suffering minor damage, though no crew injuries were reported. It marked the forty-eighth attack on commercial shipping since November 19.”
What to expect: “Early indications suggest a further softening of the market in the next 10 days,” a Xeneta analyst told the news outlet.
- “Unlike during COVID-19 when disruption continued to wreak havoc, shippers and carriers now know what they are dealing with in terms of ships being diverted around Africa to avoid the Suez Canal. … [P]erhaps some semblance of order has been restored.”
- However, current low freight volumes out of China will likely pick back up after the Lunar New Year, which ends Feb. 24.
Why it’s important: The timing of the price drops could affect contract negotiations between ocean freight carriers and shippers beginning next month.