Container shipping rates soar to $10,948 as Middle East tensions disrupt global supply chains and fuel costs rise.
The shock created by the war in the Middle East in the energy markets has severely impacted container shipping. The spot freight for a 40-foot container from China to the U.S. East Coast has risen to $10,948, approaching the historic peak seen during the pandemic.
Freight rates in global container shipping are once again moving towards record levels. The increase in oil and bunker fuel prices due to the conflicts in the Middle East has begun to reflect on freight rates by raising the operating costs of container lines.
According to data from the freight pricing platform Xeneta, the non-contract spot freight for shipments from China to the U.S. East Coast has reached $10,948 per 40-foot container.
This figure corresponds to more than four times the level on February 28, when the Iran war began.
The current price level is also very close to the historic peak recorded during the COVID-19 pandemic, which caused significant disruptions in global supply chains.
According to Xeneta data, freight rates on the same route had reached a record $11,900 in January 2022.
With the current spot freight of $10,948, there is only a $952 difference to the pandemic period record of $11,900.
Xeneta's Chief Analyst Peter Sand points out that freight rates on critical trade routes are just below the historic peak during the COVID-19 period.
If the increase in fuel costs continues, the possibility of container freight surpassing the pandemic peak also comes into play.
One of the main factors behind the rise in freight rates is the sharp increase in ships' fuel costs.
The intensification of conflicts in the Middle East, attacks on oil tankers in the Strait of Hormuz, and disruptions in the region's energy infrastructure have pushed oil prices higher.
As a result, the global average price of very low sulfur fuel oil (VLSFO), commonly used in container ships, has risen to $901.50 per ton in 20 ports.
Before the war, on February 27, the average price of the same fuel was $543.50 per ton.
Accordingly, the increase in the average price of bunker fuel has reached approximately 66%.
Container lines are passing on the increased fuel costs to their customers through bunker and other additional charges.
The rise in the freight market has not only been reflected in Xeneta data.
According to the Drewry World Container Index, the spot freight between Shanghai and New York increased by about 7% in one week, rising to $10,394.
There is a difference between the figures reported by the two organizations due to their different calculation methods. However, both indices indicate a strong increase in container shipping to the U.S. East Coast.
A new price pressure is expected in the freight market in the coming weeks.
Due to the upcoming closure of factories before the Golden Week holiday in early October in China, importers are trying to ship their loads in advance, which is increasing container demand.
Therefore, it is assessed that the combination of high bunker costs and seasonal cargo demand may lead to a new historic peak in China-U.S. East Coast freight rates.
Developments on the Shanghai-New York route, one of the world's busiest and most profitable container trade routes, are being closely monitored for their implications on the global container market.
Source: SeaNews Türkiye
