Source: Market average rates for 40‘ containers according to www.xeneta.com
Trade Analysis: Far East Eastbound
Situation
The trade lane from Europe to Asia is strongly affected by the disruptions in the Red Sea/Suez Canal. Most carriers are implementing contingency surcharges and the ongoing ripple effects are causing port congestions.
With most of the traffic diverted around the Cape of Good Hope (since December), transit times have increased by as much as 30%, according to some estimates.
Although additional vessel capacity entered the market in 2023, absorption by re-routing has mitigated its impact.
Obstacles
The majority of vessels are traveling around the Cape of Good Hope, adding an average of around 14 days to the transit time. Rerouting or pausing even a portion of those vessels would have a significant impact, not only on trade lanes that pass through the Red Sea, but on all global trade lanes.
Outlook/Solutions
Geopolitical conflicts (as well as any other potential disruptions) and fluctuating demand will play a large role in rates development for the rest of the year.
However, once the main issues are resolved, a surge in newly built ships may aggravate overcapacity concerns, creating downward pressure on rates and prompting carriers to impose fleet management initiatives.