The diversion of container ships to the Cape of Good Hope route, an alternative to the Suez Canal due to the Red Sea crisis, is expected to drive up maritime container transport rates at least until the start of February 2024. Xeneta forecasts that rates from the Far East to the Mediterranean will increase by 11% by February 2, surpassing $6,500 for a 40-foot container ($6,507 precisely). This marks a 243% rise since the Red Sea crisis intensified in mid-December 2023.
As seen in recent weeks, rates from the Far East to Northern Europe are set to undergo a smaller increase, estimated by Xeneta at 8%, reaching $5,106 per FEU. However, rates from the Far East to the US East Coast will also experience a significant rise of 17%, reaching $6,119 per FEU.
Meanwhile, shipping companies are adjusting their services to the Cape of Good Hope route to compensate for the longer sailing times. They are doing this by reducing the number of voyages, eliminating some stops, and increasing sailing speeds. The good news for freight forwarders is that after the Chinese New Year, rates might decrease.
“The Red Sea crisis is causing a capacity issue rather than a demand problem, as we saw during the pandemic”, explains Xeneta's chief analyst, Peter Sand. “Now, market imbalance and instability are driven by the significant uncertainty. Our clients report that carriers are no longer offering more expensive premium services, suggesting a possible drop in demand for this level of service. This could be due to decreasing urgency from shippers or perhaps because capacity is available, despite the chaos caused by carriers halting transits through the Suez Canal”.
