Corporate Moving — Anticipated increases in container shipping costs
As we move into the second quarter of 2024, the shipping industry is witnessing significant shifts, with freight rates expected to rise in the coming weeks. Several factors contribute to this upward trend, which stakeholders should know.
Factors influencing freight rate increases
Major carriers increase FAK rates: MSC announced an increase in Freight All Kinds (FAK) rates starting in May. Other shipping lines mirrored this move, positioning their rates above the break-even point. This adjustment, referred to as “carrier discipline,” responds to market fundamentals rather than any coordinated effort.
Full ships leaving Asia: Another critical element is the high occupancy of ships departing from Asia. This situation raises concerns about a potential shortage of empty containers in the region, further driving up rates.
General rate increases (GRIs): The market is also expecting several General Rate Increases (GRIs) in June, with the first set to take effect on May 15. These increases are anticipated to continue into June, exemplified by CMA CGM’s announcement of a FAK rate of $6,000 per equipment unit (EQP) between Asia and Europe.
Other regions and continents are expected to increase their rates in the coming weeks, and we continue to monitor this to provide further updates.
June outlook and market dynamics
The rate hikes are expected to gain momentum in June. Claire Plisson, Purchasing Director at Overseas, notes that June freight rates are already on the rise, driven by market panic due to limited space availability. Ships leaving China are fully booked until mid-June, a trend likely to extend into mid-July, marking an early peak season.
Restocking and increased volumes
According to Freightos, the volume increase on Asia-Europe routes is notable, particularly during what is typically considered a weak season. This surge is attributed to a restocking cycle in Europe, leading to higher demand for shipping capacity. Current rates for a 40’ container from Asia to Europe are around $4,151 and $5,179 to the Mediterranean. The Transpacific routes are also experiencing rate hikes, with increases estimated at 33% for the West Coast and 19% for the East Coast.
We are committed to working with these challenges and emphasize the importance of vigilant planning and adaptability. We closely monitor the situation and will adjust our strategies as needed to ensure the continuity of our client’s operations. Please contact your local move consultant for further assistance and to discuss how these changes may impact your specific needs.
Filip Leibl
Group Operations Manager
Santa Fe Relocation
filip.leibl@staging.santaferelo.com
