Ocean freight rates are expected to continue to rise: as per MSK announced a rise in Europe to $9,000, and that could be just the beginning.
There are reports that the Houthis have attacked three ships. In the past 24 hours, Israel has been attacked by hundreds of rockets and drones. Palestinian media reported that Israel has attacked the designated “safe zone” in Gaza.
The United Nations Security Council voted 14 In favor of the adoption of Resolution 2735, calling for the “establishment of a safe zone.” calls for an immediate, comprehensive and complete ceasefire in the Gaza Strip and urges Israel and the Palestinian Islamic Resistance Movement (Hamas) to fully implement the resolution “immediately and unconditionally”.
Shipping companies’ ocean freight futures prices have fallen, and many media have analyzed that ocean freight rates will also fall. However, the reality is that the Red Sea crisis has hindered the decline in ocean freight rates.
The reasons why the resolution still cannot solve the problem of rising sea freight are as follows：
1. “War is not a kid’s game, and a resolution cannot stop the war. It has already caused damage and sacrifices, and a resolution is obviously impossible to stop the war. Moreover, the Middle East involves many countries and forces competing for power. At least until the end of the Ukraine-Russia war, there is no power struggle in the Middle East. The Red Sea crisis cannot be resolved before the outcome.
Armed forces, whether Saudi Arabia will eliminate the dollar as the only settlement currency for oil, how to deal with the end of the Ukraine-Russia war, how to compensate for the losses in Gaza, the status of Hamas and how to confirm the relationship between Israel and Palestine. Issues such as borders between countries are far from being solved by a single agreement. They require the participation of many agreements and many countries. Therefore, many shipping companies need to detour through South Africa, thereby increasing sailing distance, increasing fuel costs, and reducing container return rates. Leading to a significant increase in costs.”
2. Rising freight rates are not just a result of Houthis attacks on ships causing shipping lines to turn to Africa. For example, Singapore’s main port terminals are congested, occupying shipping capacity and containers are concentrated, as well as ongoing port strikes in European ports such as Hamburg, Antwerp, and the East Coast of the United States, resulting in terminal congestion and the inability of ships to enter or exit. discharge.
3. Many countries have implemented trade protectionism against new energy vehicles by imposing tariffs, resulting in the concentration of new energy vehicle shipments and occupying transportation capacity. causing importers to stockpile goods, especially considering the surge in foreign trade orders at many factories. According to the feedback from G-Teck Global Division and Domestic Division, orders incoming have been nearly 2.4 times than the same time of the presious years;
4. Starting from the second half of 2022, many shipping companies have been operating at a loss, and freight forwarders have also laid off employees and cut salaries. Almost all the money earned in 2021 has been lost. How can it be possible to maintain the freight rate? What about the decline? Even if it does drop, even if there is residual heat, it will take at least 3 months to half a year to see the effect. This means that even if all conflicts and power struggles around the world stop immediately, the drop in freight rates will not occur until after October. “
What shall we do?
G-Teck Company has been actively contacting many shipping companies. Currently, we have signed global logistics strategic cooperation agreements with some global shipping companies. Although freight rates are rising, we may get better price.” But full understanding and negotiation in advance and in time are very necessary.
Post time: Jun-19-2024
