Under continuing pressure from geopolitical disruptions, ocean freight rates have soared in September, more than tripling in price on certain routes since the start of the U.S. and Israel’s war on Iran in February, according to analysis from Xeneta.
“Spot rates from Far East to US West Coast and US East Coast are up 324% and 325% respectively since pre-Hormuz crisis at the end of February. That leaves freight rates on these critical trades just 18% and 11% short of the all-time high set during the COVID-19 disruption. With bunker prices pushing fuel surcharges higher, surpassing the pandemic peak cannot be ruled out, which would be an extraordinary market development,” Peter Sand, Xeneta’s chief analyst, said in a release.
In response, carriers are seizing the opportunity while the market is hot, he said. Ocean lines have added capacity headed to the U.S. East Coast ahead of what could be a turn in the market within the next two to three weeks. In recent weeks, offered capacity on the Far East to U.S. East Coast trade has risen by 6-7% in September from August.
“If a freight rate record is broken, it is most likely to occur on the trade into US East Coast, but even if we do not see a new all-time high, the fact we are even discussing the possibility demonstrates how sensitive critical ocean container shipping trades are to geopolitical forces and how a regional conflict in the Middle East can have major implications at a global level,” Sand said.
