Ocean freight container shipping spot rates are set to surpass levels seen during the peak of the Red Sea crisis, reaching heights not witnessed since the Covid-19 pandemic, according to the latest data released by Xeneta.

Read also: Freight Rates Are Ballooning to Pandemic Highs 

Peter Sand, Xeneta’s Chief Analyst, remarked, “The market has experienced rapid and dramatic increases in May, with further growth in spot rates expected. On June 1, we anticipate spot rates reaching levels unseen since 2022, when the pandemic severely disrupted ocean freight supply chains.”

Rapid Rate Increases

Spot rates have been climbing swiftly across various trade routes:

• Far East to US West Coast: Rates are projected to hit $5,170 per FEU on June 1, surpassing the Red Sea crisis peak of $4,820 from February 1. This marks a 57% increase in May, the highest in 640 days.
• Far East to US East Coast**: Rates are expected to reach $6,250 per FEU, nearing the Red Sea crisis peak of $6,260, reflecting a 50% increase since April 29.
• Far East to North Europe**: Rates are forecasted to rise to $5,280 per FEU on June 1, up from $4,839 on February 16, marking a 63% increase since April 29.
• Far East to Mediterranean**: Rates are anticipated to exceed the Red Sea crisis peak, reaching $6,175 per FEU, a 46% increase in May and the highest in 610 days.

Contributing Factors

Xeneta’s data highlights several factors driving the spike in spot rates, including ongoing Red Sea conflict, port congestion, and shippers frontloading imports ahead of the traditional Q3 peak season. Sand explained, “Businesses are shipping goods earlier to protect supply chains, contributing to market uncertainty. The situation is more nuanced now than during the Red Sea crisis.”

Efforts by ocean freight carriers to mitigate disruptions, such as increasing transshipments and re-aligning capacity, have led to severe port congestion and unintended consequences, exacerbating the rate increases.

Challenges and Optimism

While the spot rate hikes spell trouble for shippers, Sand offers a glimmer of hope. “The growth rate of spot rates in June is not as rapid as in May, hinting at a potential easing of the situation. However, carriers continue to prioritize high-paying shippers, causing issues for those with lower rates on long-term contracts.”

Freight forwarders face new surcharges and premium service pushes, leading to higher costs passed on to shippers. “The situation may worsen before it improves,” Sand warned, noting that carriers will likely continue pushing for higher rates.

In conclusion, the ocean freight container shipping industry faces significant challenges with escalating spot rates, driven by global supply chain disruptions. While there is some hope for stabilization, shippers must brace for potential further increases and ongoing uncertainty.