The Freightos Baltic Global index increased 16% month on month in December to $1,341/FEU as carriers succeeded in capacity restriction-driven GRIs early in the month on Asia – North Europe and Mediterranean lanes. This has been followed by increases related to Red Sea disruptions late in the month. Rates only surged from diversions away from the Suez Canal, however, after the close of the year.

Strong US holiday sales and consumer resilience suggest a likely restocking cycle and moderate freight volume growth into 2024. Rates were not impacted by the Red Sea crisis in December 2023 but increases to start the year – prices were above $2,700/FEU in early January – suggest a possible shift of volumes to the West Coast to avoid East Coast delays.

 

Asia to the US West Coast rates increased by 5% to $1,695/FEU in December 2023, a level 23% higher than in 2019. Strong US holiday sales and consumer resilience suggest a likely restocking cycle and moderate freight volume growth into 2024. Rates were not impacted by the Red Sea crisis in December 2023 but increases to start the year – prices were above $2,700/FEU in early January – suggest a possible shift of volumes to the West Coast to avoid East Coast delays.

Rates to the East Coast saw a 7% increase to $2,525/FEU in December 2023 and likewise did not yet reflect the impact of Red Sea diversions. As of early January, rates had spiked to $3,900/FEU. Instead of a planned reduction, Panama Canal daily transits were increased by two to 24 in January, which is a welcome development especially as carriers may look for alternatives to the Suez Canal. 

Asia to North Europe and Mediterranean prices increased significantly in December 2023, first on early-month GRIs supported by blank sailings and then on some rate increases from Red Sea disruptions as, by mid-month, most of the top carriers announced they would divert away from the Red Sea until security was restored.

North Europe rates climbed 31% to $1,590/FEU and Mediterranean prices increased by 61% to $2,401/FEU. January rates have already surpassed $4,000/FEU to Europe and $5,000/FEU to the Mediterranean, with surcharges of $500 to more than $2,000/FEU pushing actual costs higher, and additional mid-month GRIs on the way as carriers contend with the disruption.

Europe to North America rates fell by 4% to $1,176/FEU as volumes eased and the lane should not see a direct impact from Red Sea disruptions. Rates are 38% lower than in 2019.

Looking toward January, container shipping is at risk of some possible port congestion and empty container shortages – complicated by an expected increase in demand ahead of Lunar New Year – until Red Sea traffic returns. 

So far, the presence of a new international naval force in the Red Sea has not deterred Houthi attacks on commercial vessels, although international pressure is building to restore security to this crucial waterway. Looking toward January, container shipping is at risk of some possible port congestion and empty container shortages – complicated by an expected increase in demand ahead of Lunar New Year – until Red Sea traffic returns. Upward pressure on spot rates in the form of GRIs and surcharges will also persist keeping rates well above normal levels. With excess capacity available to address the diversions and volumes back toward pre-pandemic levels, the crisis may be unlikely to disrupt operations and push rates up to the extreme extent seen during the pandemic.

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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