Ocean freight shipping has made headlines again due to rapid increases in spot rates on major routes out of the Far East. But is there more to the story?
Since April, average spot rates from the Far East surged to North Europe (+31%), the US West Coast (+30%), the Mediterranean (+25%), and the US East Coast (+22%).
For all shippers, the most crucial trade lanes are always the ones they utilize in their supply chains, whether it’s a major route like the Transpacific or a smaller inter-regional feeder service.
This week’s update will therefore look beyond the four major routes out of the Far East to understand if rapid spot rate increases have been observed on other top global trades.
Shippers and spot rates in South America.
The most significant rate increase among these top trades is from the Far East to the South America East Coast, up by 83% since April 1 to reach USD 6,320 per FEU on May 22, those rates impact our customers directly because it is our main market.
This is particularly notable as spot rates to the South America East Coast did not see the same level of increase as other top trades during the Red Sea crisis, rising by only 26% between December 14, 2023, and January 8, 2024.
So, while other trades remain below their Red Sea crisis peak despite recent increases, the current spot rate of USD 6,320 per FEU from the Far East to South America East Coast is the highest since October 2022.
Similar to other top trades out of the Far East, the rallying spot market on the South America East Coast trade has driven up the spread between spot and long-term rates.
The spread increased from USD 1,170 per FEU on April 1 to USD 3,815 on May 22, primarily due to the rapid rise in spot rates, with long-term rates increasing by only USD 220 per FEU in that time.
However, even this small increase of USD 220 per FEU means the Far East to South America East Coast has seen the biggest increase in long-term rates since April 1 across the top 13 trades.