Container rates ease for first time amid Iran war disruption

Ocean rates are easing slightly after several weeks of increases, while ongoing geopolitical tensions continue to weigh on bunker fuel prices. Air freight prices have risen sharply and jet fuel shortages are looming.After six consecutive weeks of rate increases, the Drewry World Container Index dropped by 3% this week. After the US and Israel attacked Iran on 28 February, higher bunker fuel prices triggered container spot rates to rise.Drewry expects rates on the Asia–Europe trade to remain stable next week and to be less volatile on the Transpacific trade.According to the shipping consultant, the US-led naval blockade around the Strait of Hormuz has worsened the disruption and pushed oil prices even higher. “If ongoing negotiations fail, shippers should prepare for reduced schedule reliability, potential port omissions, longer lead times and upward pressure on freight rates,” Drewry noted.Freightos wrote in an update that, because of a shortage of bunker fuel at some Asian container hubs, ships have to go to alternative refuelling ports, “ironically burning more fuel in the process”. “Rising fuel costs have impacted container rates across the market, even for lanes where fuel availability is not yet a factor,” according to Freightos.Jet fuel prices more than doubledJet fuel prices have more than doubled, Freightos stated. Air freight is highly dependent on passenger flights. While flights to and from the Middle East remain 60% down compared to pre-war levels, cargo capacity is far lower. Jet fuel shortages are forcing Vietnam Airlines to cancel 20% of its flights. If there is no quick solution to the blockade of the Strait of Hormuz, Europe could experience shortages as soon as May, Freightos noted. The Freightos Air Index for South Asia to Europe has doubled since the Iran war to $5.15/kg, and from Southeast Asia surged by 60% to $5.30/kg. Both are still climbing, Freightos adds.KLM April 16 announced it would chancel 80 flights in the coming month in Europe due to high kerosine costs. The company empasises there is no shortage. The Freightos Air Index for South Asia to Europe doubled since the Iran war. to $5.15/kg and from south East Asia surgued by 60% tot $5.30/kg. Both are still climbing, Freightos adds.