Ocean freight rates increase for first time since July, shows data

Drewry World Container Index up 4% ahead of Christmas, New Year rush

Ocean freight rates across major container trading routes rose for the first time since July as the movement of goods surged ahead of the Christmas and New Year season, data shows.

 

The Drewry World Container Index — a global benchmark measuring weekly ocean freight rates across eight major east-west routes — rose 4 per cent from the previous week to $3,213 for a 40-foot container (40-foot equivalent unit). 

According to Drewry, freight rates from China to Europe increased by 8 to 11 per cent between October 24 and 31. Freight rates from Shanghai to Genoa rose to $3,213 per container, while rates to Rotterdam increased to $3,396 per container. The most price spikes were seen for Asia-Europe transit, with Shanghai-Los Angeles freight rates increasing only 1 per cent week-on-week. 

 

Freight rates have been volatile since the Covid-19 pandemic, which disrupted global logistics. The current container index level is 69 per cent below the pandemic peak of $10,377 in September 2021, but 126 per cent higher than the 2019 pre-pandemic average of $1,420. 

After major disruptions due to geopolitical tensions in West Asia, container rates had been in freefall since July, dropping from nearly $6,000 per 40-foot container to $3,095 in late October. The market intelligence firm, along with maritime experts, expects rates on most routes will continue to rise as the Christmas rush intensifies global trade. 

Due to the ongoing conflict in Israel, shipping lines have incurred additional war risk premiums on maritime insurance. Following increased violence by Houthi militants, shipping lines have also decided to entirely avoid the Red Sea and instead navigate around the Cape of Good Hope, extending transit times by 12–14 days and increasing costs. 

With the US maintaining tariffs on Chinese imports, repositioning empty containers remains a challenge, keeping global container availability in flux. Any sudden disruptions change the network and cost dynamics for loading empty containers, as some regions, such as South Asia, are export-heavy, while others, like Europe, are import-heavy. 

Any increase in container capacity is unlikely in the short term, and the supply chain is expected to remain under pressure going forward, a government official said. 

Last month, the central government introduced relief measures to protect traders and shippers from rising costs due to the container crisis. These included augmenting container vessel capacity by six vessels through the Shipping Corporation of India and providing concessions on certain charges by the Container Corporation of India.