The Freightos Baltic Global index spiked 154% month-on-month in January to $3,411/FEU as diversions away from the Red Sea and some pre-Lunar New Year increase in demand led to a flurry of GRIs and surcharges as capacity and equipment tightened.

Despite an international naval force in place and US and UK strikes on Houthi positions in Yemen, attacks on Red Sea traffic continued through January as did widespread container carrier diversions away from the Suez Canal.

The longer journey around the Cape of Good Hope for ex-Asia to N. Europe and Mediterranean ports, and some Asia - N. America East Coast traffic, has resulted in higher costs to carriers in the form of fuel and the need to operate additional vessels to move the same number of containers. The longer transit times have also disrupted schedules, and, together with an increase in demand ahead of LNY, made space and empty equipment availability tight out of Asian export hubs, leading to significant upward pressure on rates. Despite these challenges, reports of significant port congestion have been minimal.

The longer transit times have also disrupted schedules, and, together with an increase in demand ahead of LNY, made space and empty equipment availability tight out of Asian export hubs, leading to significant upward pressure on rates. Despite these challenges, reports of significant port congestion have been minimal.

Prices for Asia - N. America East Coast containers increased 144% to $6,152/FEU month-on-month in January, a level 86% higher than in 2019. And though not directly impacted by diversions, rates for Asia - N. America West Coast rates increased by 142% to $4,099/FEU as some demand may be shifting to the West Coast to avoid diversion impacts and as equipment shortages in Asia may be impacting transpacific rates as well.

The Red Sea crisis likewise meant that Asia to N. Europe rates spiked 243% in January to $5,456/FEU, and to the Mediterranean, prices increased by 169% to $6,449/FEU, though rates levelled off late in the month.

The Red Sea crisis likewise meant that Asia to N. Europe rates spiked 243% in January to $5,456/FEU, and to the Mediterranean, prices increased by 169% to $6,449/FEU, though rates levelled off late in the month.

Carriers are still working to add vessels and adjust ongoing schedules which should accommodate the longer voyages and help improve reliability in the coming weeks. Demand-side pressure is expected to ease in the period after LNY too. So, as operations improve and with pre-LNY urgency likely a significant contributor to rate increases in January, freight rates – despite GRIs and surcharges announced for February – may be reaching their ceiling and are likely to ease from their current levels post-LNY. Transit times and rates, however, will stay above normal levels until Red Sea traffic resumes.

Congestion shifts of capacity to Suez Canal lanes, and equipment shortages may not be impacting non-Red Sea lanes as much as carriers had anticipated, as transatlantic rates fell by 1% to $1,168/FEU in January and carriers are postponing planned GRIs and surcharges – some aimed at pushing rates up to the $5k/FEU level – until February.

About Judah Levine, Research Lead, Freightos

Judah is an experienced market research manager, using data-driven analytics to deliver market-based insights. Judah produces the Freightos Group's FBX Weekly Freight Update and other research on what's happening in the industry from shipper behaviors to the latest in logistics technology and digitization.


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