Hard to find a box? Port congestion? Freight prices soar? Hard to match the grand occasion two years ago

On the 18th, 19th, and 20th, the US military and the Houthi armed forces continued to attack each other. A spokesman for the Houthi armed forces said on the 19th local time that the organization fired several missiles at a US ship "Khem Ranj" sailing in the Gulf of Aden and hit the ship. On the 20th, the US military hit an anti-ship missile aimed at the Gulf of Aden and prepared to be launched by the Houthis. The latest strikes came hours after the United States struck three more Houthi anti-ship missiles.

Given the current extremely unstable situation in and around the Red Sea/Gulf of Aden, liner companies believe it is necessary to take measures to ensure the safety of ships and cargo. CMA CGM announced on the 19th that it would suspend its NEMO service jointly operated with Mediterranean Shipping Company through the Suez Canal and divert it to the Cape of Good Hope. On the same day, Maersk also made a number of decisions, including stopping accepting bookings to and from Berbera/Hodeida/Aden and Djibouti. Previously, Japan's three major shipping companies also announced that all their ships would stop crossing the Red Sea waters.

According to the latest report from well-known maritime consulting firm Sea-Intelligence, commercial ships in the Red Sea have been frequently attacked recently, causing many ships to choose to bypass the Cape of Good Hope in South Africa. This situation has had a greater impact on transportation capacity, and the impact has even exceeded the initial stage of the epidemic. At the same time, as the Spring Festival approaches, the price increase trend in the container shipping market begins to weaken. According to the latest quotation on the 19th, the Shanghai Container Freight Index SCFI increased by 1.52% on a weekly basis to 2239.61 points. While the index has risen for eight consecutive weeks, gains have begun to narrow. The situation on the European route is even more obvious. This route experienced a 2.35% decline in this period. This is the first time that the continuous increase has stopped since the Red Sea crisis drove freight rates to soar. As for the Mediterranean line, it rose slightly by 0.74%. The West and East US rose by 8.71% and 7.72% respectively, but all increases also converged.

Many shipping companies and freight forwarding practitioners said that the peak shipments in Asia before the end of January were mainly concentrated before the end of January. Compared with the European line, the cargo volume of the American line is larger, and many ships are fully loaded. However, the situation on the European line is relatively weak, and high freight rates have shown signs of easing. Currently, shipping companies are working hard to collect goods for February, and there are rumors that some carriers have begun to lower freight rates to collect goods. The Sea-Intelligence report pointed out that the 57% drop in global shipping capacity caused by the Red Sea shipping crisis was the second largest in recent years, second only to the 2021 Changzhi ship running aground in the Suez Canal, and exceeded the 47% drop in the early days of the new crown epidemic. According to the latest data from the Ningbo Shipping Exchange NCFI Index, shipments in the European Mediterranean route market have shown a slight downward trend. In order to obtain cargo capacity, most liner companies have begun to lower freight rates. Specifically, the freight rate on the European route fell by 8.2% compared with the previous issue; the freight rate on the east-west route fell by 10.2% compared with the previous issue; and the freight rate on the east-west route fell by 7.9% compared with the previous issue.

Judging from statistics on spot freight rates in the container shipping market, some liner companies have indeed begun to lower freight rates from the end of January to February. Among them, the freight rate for the Shanghai to Rotterdam route has basically remained within the range of US$4,539/FEU to US$6,077/FEU. Not long ago, MSC and HPL's quotations even exceeded US$8,000/FEU.

Feedback from the freight forwarding market is also unsatisfactory. A person from a listed freight forwarding company said that although the cargo volume of the container freight forwarding sector will increase significantly, the current profit margin of freight forwarding is already very small. Based on current market conditions, it will be difficult to recreate the prosperity of two years ago. Since many liner companies have already made the decision to divert, this cannot be changed in the short term, but it is expected that shipping companies’ freight rates will have limited room for downward pressure before the Spring Festival.