The Red Sea crisis dominated another frenzied week for the container shipping market with the SCFI rising by 40% - only the 4th time since 2009 that spot freight rates jumped by more than 40% in a single week. All long haul routes recorded strong rate gains led by the Asia-Europe trades, with the elevated rates expected to hold through January and February as capacity will remain tight in the next 6 weeks. 12% of global containership capacity is currently diverted to the Cape route and their numbers will continue to rise after the latest Houthi attacks forced Maersk to temporarily suspend Red Sea transits for the second time in as many weeks.
The impact of the diversions will impact capacity available for departures from Asia starting from week 4 onwards, with significant drops in Asia-Europe and US East Coast capacity of up to 30% on certain weeks.
Red Sea crisis to keep freight rates elevated through February
The number of containerships diverted to the Cape Route has reached 262 ships as at 31 December 2023 with a total capacity of 3.4m teu or 12% of the global capacity. Apart from ships diverted from the Suez route, there is also an increasing number of ships diverted from the Panama Canal to avoid the Canal congestion. With the crisis hitting Europe rates the hardest, European carriers have taken a divergent approach with Maersk and CMA CGM resuming Suez transits as of last week while MSC and Hapag-Lloyd as well as the majority of the main carriers continued to re-route to the Cape route. However, Maersk has suspended their Suez transits on 31 December after the latest attack on the 15,282 teu MAERSK HANGZHOU which will cause further schedule disruptions over the coming weeks and keep freight rates elevated through the next 4-8 weeks.
Weekly/Monthly Market Pulse: US$1,500/US$1,800 per year