The container freight rate rally received another boost heading into August as carriers pushed through rate increases across the Transpacific, Latin America, India subcontinent and Middle East routes with the SCFI composite index rebounding by 4.7% as it clawed back part of its recent losses and defying the weakness on the Asia-Europe route where freight rates remain under downward pressure. Cargo demand remains strong out of Asia, and persistent port congestion in China has created space and equipment shortages that have kept freight rates at elevated levels, giving carriers sufficient confidence to upgrade their earnings forecasts for the 3rd quarter.
The Middle East tensions have not deterred carriers from using the Suez route, as the total capacity diverted to the Cape route dropped to 5.2% of the global fleet to reach its lowest point since January 2024. Containership transits through the Bab-el-Mandeb continues with CMA CGM and Maersk still increasing trans-Suez vessel transits. The idled fleet has risen slightly as several Iranian ships are stranded in the Far East while a FESCO ship sunk by a naval drone in the Black Sea has become the first containership casualty in the Ukraine-Russia conflict.
Johnson Leung
CMA CGM and Maersk continue to push for early return to Suez route despite Houthi threats
Carriers have stepped up the number of Suez and Red Sea transits in the last 2 weeks despite the tensions in the Middle East as the number of ships diverted to the Cape route has dropped to the lowest level since January 2024 as the total number of diverted ships fell below 300 units with a total capacity of just 4.1m TEU, down from a peak of 5.3m TEU earlier this year. CMA CGM and Maersk continues to drive the early return to the trans-Suez route, directing ships on their EPIC and AE11 westbound voyages respectively through the Bab el Mandeb. These ships will avoid calling at Saudi ports and will head directly to the Suez.
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