Sea Freight

The attacks on vessels in the Red Sea over the last few months could mean sea freight rate quotations are about to fall. Find out more.‍

Here at KTL, we keep a close watch on the global situations, and provide updates accordingly.

Sarah Woodrow

March 23, 2024

Amid the Red Sea crisis, sea freight rate quotations might be starting to fall 

Anyone who has requested a quote for freight by sea lately is likely to have seen the impact on the price caused by the attacks on vessels in the Red Sea over the last few months. 

With a sizeable proportion of global cargo being transported via this route, the sharp rise in sea freight rate quotations amid the recent tensions in the region has undoubtedly brought real pain to importers and exporters. 

However, it seems that there is emerging cause for optimism. One CNBC report last month, for example, said that ocean freight rates between Asia and the United States had begun to drop, even if cargo shipping costs were still well above what they were prior to the start of the crisis on 14th December. 

The American business news channel cited an analysis of recent cargo data from the ocean and air freight benchmarking platform, Xeneta, as supporting this conclusion. 

With the news outlet adding that ocean shipping rates in Europe and the Mediterranean had already begun to fall at the end of January, it seems we are getting ever-stronger indications of imminent declines in sea freight rate quotations around the globe. 

What has the situation been for ocean freight rates in March? 

Looking to more recent data, a reading from 14th March 2024 – from a consulting company mentioned by the website – indicated that the global WCI index was at $3,162 for a 40-foot container. 

That constituted a 4% week-by-week decline, and is also appreciably lower than the approximately $3,800 seen at the end of January. 

However, sea freight rate quotations are evidently still elevated in many places, given that the reading at the start of December, before the Red Sea crisis began, was $1,661. 

Indications that freight quotations could see steeper declines in the months ahead 

Very few things can be taken for granted on the current uncertain backdrop. However, experts have expressed a belief that, as dynamic and sudden as the price rises over December and January were, there may also be a strong and sudden decline in rates to come. 

The site said that according to analysts from Transport Intelligence, the present still-high rates are unlikely to remain at that level in the longer term. 

Indeed, an abrupt end to the crisis would lead to the introduction of significant additional capacity in international waters. That’s a situation that could cause sea freight rates to plummet, especially when one also accounts for the ships ordered after the pandemic boom that are set to enter the oceans during 2024. 

As ever here at KTL, we will keep a close watch on the global situation, and provide updates accordingly. In the meantime, we will continue to leverage our own strong longstanding partnerships to help ensure importers and exporters keep on benefitting from the most competitive possible sea freight rate quotations. 

To request such a quote from us, please feel free to contact our team

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