Container prices continue to fall despite detouring

After the ceasefire in Gaza, a quick return of shipping through the Suez Canal was expected. Although the Houthi rebels have ceased their attacks on international ships, the threat in the Middle East is far from gone. The diversion route around Africa remains the most important connection between Asia and Europe. So far, it has remained quiet after the threatening language from American president Donald Trump towards Iran. This does not mean that the threat has disappeared. On the contrary, a second aircraft carrier is on its way to exert pressure on Iran in the negotiations over the development of nuclear weapons. It should therefore come as no surprise that many shipping companies continue to divert around the Cape of Good Hope for the time being. According to the biweekly Red Sea Diversion Tracker, which data platform Drewry recently launched, 60 container ships passed through the Suez Canal in the two weeks until February 8. In the two weeks prior, there were nearly the same number, namely 61. The number of ships sailing around the Cape of Good Hope has decreased by 4% in the past two weeks compared to the previous two weeks, totaling 303 ships. Thus, this route remains the most important route for shipping between Asia and Europe. Although the diversion route via the Cape of Good Hope takes up capacity, spot rates have been declining for five consecutive weeks. The Drewry World Container Index is down this week by a modest 1%. Once again, it is the routes from China to Europe and the US that are causing this decline. Spot rates to Genoa are down by 3%, to Rotterdam by 2%, and to LA and New York by 1%. On the routes to the US, many more sailings have been canceled than in previous years leading up to the Chinese New Year. Due to lower demand for freight transport from China, Drewry expects spot prices to decline (slightly) further, including on the Asia-Europe route.