Freight rates will exceed $20,000/FFE! Maersk announces increase in FAK rates for European routes to nearly $10,000

Market analysis generally believes that freight rates will continue to increase until enough shippers reduce their cargo transportation due to high freight rates, thus achieving a balance between container demand and ship capacity. However, the exact threshold of this balance point remains unknown.

According to Sea-Intelligence analysis, in order to predict the possible increase in freight rates, it is possible to refer to the peak levels during the epidemic. However, this does not take into account the current increase in sailing distances around Africa caused by the Red Sea crisis. To more accurately assess this impact, Sea-Intelligence compared the relationship between sailing distance and rates, measured in cents per FFE per nautical mile. The analysis shows that during the epidemic, freight rates per nautical mile reached abnormally high levels.

Based on this historical data, Sea-Intelligence speculated on the possible spot freight rate level per FFE as the current crisis continues, combined with the new sailing distance. The results show that if the rate per nautical mile reaches the level during the epidemic, the spot freight from Shanghai to Rotterdam may be as high as US$18,900/FFE, the freight from Shanghai to Genoa may reach US$21,600/FFE, and the return freight from Rotterdam to Shanghai may reach US$2,200/FFE.

Alan Murphy, CEO of Sea-Intelligence, said that this does not mean that freight rates will not rise again, but if the rate per nautical mile remains the same as during the epidemic, then the spot freight rate may reach the above level. This forecast is undoubtedly a severe challenge for shippers.

At the same time, the shipping market continues to show an upward trend. On the 13th, Maersk issued an announcement announcing an increase in the FAK rate on the Asia-Europe route, up to US$9,400/FEU, and this adjustment will officially take effect on July 1. The market generally expects that other leading shipping companies will follow suit and take similar rate adjustment measures. We will wait and see to observe the further development of this trend.