Container Freight Rates: Mixed Signals Amidst Red Sea Calm
Freight rate indices present a mixed picture, with a general decline observed as lines and shippers negotiate annual contracts in the transpacific trade. However, Linerlytica’s recent report signals a potential series of rate hikes in May, spurred by the third consecutive increase in the Shanghai Container Freight Index (SCFI).
Analysts highlight tightening capacity utilization across major trade routes, supporting carriers’ efforts to implement General Rate Increases (GRI). However, dynamics vary across different indices. While the Ningbo Containerized Freight Index (NCFI) shows a decline since Chinese New Year, intra-Asia routes witness an uptick in rates.
The China Containerized Freight Index (CCFI) experienced growth but has moderated in recent months. Drewry’s World Composite Index (WCI) aligns with the NCFI and CCFI trends, declining steadily over the past 12 weeks.
Contradictory views emerge regarding transpacific contract rates. Linerlytica suggests settlements above last year’s levels, driven by current spot rate levels. In contrast, Drewry’s Shipper Benchmarking Club indicates a year-on-year decline, albeit unspecified.
While spot rates surged due to Red Sea avoidance, Braemar notes a subsequent gentle erosion, with rates expected to remain elevated but soften in the short term. However, Linerlytica anticipates sustained demand due to new vessel deliveries and summer service deployments, maintaining absorption of available supply.
Charter rates remain resilient overall, particularly for larger vessel sizes, despite some softening in smaller sectors. However, the correlation between spot and charter rates appears disrupted, posing a unique challenge to market dynamics.
