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The caution that carriers have shown in their earnings forecasts for the 2024 financial year stands in sharp contrast to the surging spot freight rates with the SCFI hitting a fresh 2 year high. Bullish Chinese freight futures are predicting further rate gains in the coming 4 months, with a correction only expected in the 4th quarter of the year.

The bullish sentiment has also pushed charter rates to fresh 2-year highs, with the record level of ship deliveries doing little to dampen the buoyant market. New ship deliveries in April reached 59 units for 342,200 teu setting new records for both the number of ships delivered as well as the highest level of new capacity added in a single month. Although nominal capacity has risen by 10.4% year on year to reach 29.5m teu currently, effective demand has grown faster by 13.1% based on Linerlytica’s estimates with the shortage of vessel capacity expected to persist until October this year.

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Container freight rates set for further gains
Spot freight rates on the Shanghai to North Europe route could rise by a further 35% by August this year, if the CoFIF freight futures traded on the Shanghai Futures Exchange are accurate in their predictions. The next 6 months will provide a key test to usefulness of the freight futures in predicting future freight rate movements, with its current bullishness standing in sharp contrast to the carriers’ own bearish earnings forecast for the same period.

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