Shipping "black swan" continues: Shanghai export container freight index rises sharply, spot freight rates change every week

Recently, the Red Sea waterway has been blocked, and all goods shipped from Asia to Europe need to be diverted to the Cape of Good Hope. On December 20, major container shipping giants have increased surcharges to cover costs.

Affected by multiple factors, the container shipping index rose sharply. Data from the Shanghai Shipping Exchange shows that on December 22, the Shanghai Export Container Freight Index increased by 161.47 points year-on-year (the previous issue was December 15, updated weekly).

A Shanghai freight forwarder told a reporter from Securities Daily: "Recently, spot freight rates on European routes have been increasing, mainly due to the increase by shipping companies. The maximum price for a small container on December 22 is US$3,960 (excluding IMO surcharges). ), the price will continue to increase next week, and we have no space left. Previously, the European line small container was more than 1,000 US dollars."

Shipping "black swan" impact continues, giants collectively raise surcharges

At present, the top 10 shipping giants in the world have suspended sailings on the Red Sea or diverted to the Cape of Good Hope. Detouring from the Cape of Good Hope takes 10 days longer than the original voyage to Europe via the Suez Canal. The voyage increases additional fuel consumption and brings about an increase in the cost of bulk cargo transportation.

According to Clarksons statistics, nearly 10% of the world’s seaborne goods complete trade transportation through the Red Sea and Suez Canal. As the only way through the Suez Canal, the Red Sea plays an important role in global shipping routes.

“The impact of the dry season in Panama and the situation in the Red Sea on shipping will lead to a contraction of short-term shipping capacity supply, a decrease in efficiency, and an increase in costs, pushing up freight rates. If the Cape of Good Hope is detoured for a long time, the shipping distance will be significantly lengthened and the demand for ton-mile shipping capacity will increase. .” The above-mentioned freight forwarder added to reporters, “After the deviation causes the voyage time to be extended, the dynamic supply of transportation capacity will be tightened, but the shipping company can rebalance the transportation capacity by increasing the deployment of transportation capacity and increasing the speed.”

Shipping giants including Maersk, CMA CGM, MSC, etc. are trying to cover their additional costs through surcharges. Additional fees range from $250 to $3,000.

MSC announced that the company's ships will avoid the Suez Canal and plans to charge US$500/TEU (containers with a length of 20 feet) and US$1,000/FEU for each refrigerated container exported from Europe to the Far East and the Middle East from January 1, 2024. (container length 40 feet) and an additional fee of $1500.

In order to recover the cost of the carrier, Maersk adds a surcharge of US$200 to US$450 per box from Far East Asia to Northern Europe and the Mediterranean. In addition, Maersk has decided to impose peak season surcharges on selected markets starting from January 1, 2024, with fees ranging from US$300 to US$2,000.

Hapag-Lloyd has renamed its new surcharge the "Operational Recovery Surcharge", which will come into effect on January 1. There is a surcharge ranging from US$500 to US$1,500 per box. There is also a peak season surcharge of US$500.

Regarding the shipping black swan incident, A-share-related listed companies have appeared on Shanghai Stock Exchange E Interactive to express their opinions. Ruimaotong said in a reply to investors that the situation in the Red Sea has a greater impact on the container shipping business of surrounding routes, but has a limited impact on dry bulk transportation.

Haitong Development stated in its reply to investors that due to the current impact of geopolitics, the shipping capacity of ships heading to Europe is tight and freight rates have increased. In terms of international ocean transportation, the freight rates of each route are different and are determined by negotiation between the company and the charterer and with reference to the shipping market freight levels and related indices.

Oil transportation surcharges rise, and container shipping prices are expected to rise again in the short term

“The Suez Canal and Panama Canal in the Red Sea region are the two most important shipping channels in the world. Bulk dry bulk cargo from the U.S. Gulf generally reaches Asia through the Panama Canal. However, since April this year, the Panama Canal has been experiencing a serious crisis that has been rare in 70 years. Due to the drought, the navigation capacity of the Panama Canal has been severely hampered. Since then, bulk dry bulk cargo from the U.S. Gulf has generally been sent to Asia through the Suez Canal, which is also one of the two traditional routes from Asia to Northern European ports." An insider from Air China Ocean Shipping told "Securities Daily reporter said.

"Because everyone is afraid of price increases, they advance orders, add detours, long voyage times, and fewer flights, which in disguise aggravates the rise in freight prices." Yang Hong, chairman of Shanghai Yujian Logistics Technology Co., Ltd., told a reporter from Securities Daily.

Shanghai Securities stated that about 30% of the freight volume carried by the Red Sea Channel is container trade and 10% is crude oil trade, so container shipping and oil shipping rates have the greatest impact.

A few days after some shipowners considered detouring around the Cape of Good Hope as an alternative, product oil tanker freight rates soared to the highest level this year. The surcharge for an LR2 tanker carrying 90,000 tons of cargo was as high as US$950,000, with prices nearly doubling in a week. .

Clarkson Securities analyst Mrkedal believes that the current stock prices of crude oil and product tankers have not yet reflected the disruption of the situation in the Red Sea. If the Suez Canal is completely closed, the market freight rate of clean tankers may increase by 12%. In theory, the freight rate for Suezmax tankers could soar to about US$200,000 per day.

Catalyzed by the situation in the Red Sea, some shipping companies plan to increase prices again in the second half of January next year.

Quotations leaked from Evergreen Marine Corp. (EMC) show that the freight rates at the beginning of next year will be US$3,694/TEU and US$5,988/FEU respectively. Taking into account surcharges, container shipping prices will rise multiple times.

Galaxy Futures said that in the short term, the Red Sea crisis will catalyze price increases, and freight rates are expected to still have room to rise in the short term. If the detour factors are eliminated before the Spring Festival, the supply and demand pattern of container transportation is expected to remain weak next year. Nomura Securities analyst Masaharu Hirokane said that in January next year, the annual freight rate contract for the Asia-Europe route will be renewed, and freight rates may generally rise by then. The severity of the current situation may be similar to the supply chain disruptions from 2020 to 2022. It would not be surprising if shipping prices on Asia-Europe routes more than doubled.