Spot freight rates from Asia to North America have surged due to the deteriorating security situation in the Red Sea. Carriers are expected to leverage market uncertainty during January negotiations for 2024–25 service contracts. The attacks on shipping have led vessels to divert around the African Cape of Good Hope, increasing voyage times and costs. Some customers are considering transloading options and re-routing shipments via the West Coast. This will potentially result in possible congestion in the West Coast US Ports, which will result in some diversion into Canadian West Coast Ports.
Concerns arise about potential price gouging on Asia to Europe services, with charges expected to spike, reaching $12-15,000/FEU prior to the rush before Chinese New Year. Analysts dispute a genuine capacity crunch, emphasizing carriers’ tactics to limit capacity amid Red Sea challenges. The situation may impact upcoming contract negotiations, with carriers likely to seek higher rates. Certain shipper’s association questions the notion of a peak season, highlighting flat demand and carriers operating with low utilization rates.
For pricing information, please contact our Canaan Group sales team.
- Journal of Commerce (JOC). (2023). “Trans-Pacific Spot Rates Explode Amid Accelerating Red Sea Carrier Diversions.” Retrieved from https://www.joc.com/article/trans-pacific-spot-rates-explode-amid-accelerating-red-sea-carrier-diversions_20231221.html.
- Container News. (2023). “Shippers Accuse Carriers of Price Gouging.” Retrieved from https://container-news.com/shippers-accuse-carriers-of-price-gouging/.