Container freight rates rise sharply

Container freight rates rose sharply this week. Both the Drewry World Container Index (WCI) and the Shanghai Containerized Freight Index (SCFI) recorded strong increases on the main trade routes. A combination of geopolitical tensions, higher bunker prices and an early peak season is currently causing the market to tighten rapidly.The main driver behind the recent rise in rates is the unrest surrounding Iran, the Strait of Hormuz and the Red Sea. Shipping lines remain cautious with their routing and capacity management, while higher oil prices are feeding directly into bunker and fuel costs. As a result, carriers are introducing additional surcharges on a large scale, including Emergency Fuel Surcharges, Peak Season Surcharges and General Rate Increases.According to Drewry, the WCI increased by 12% this week to USD 2,553 per 40ft container. In particular, routes from Shanghai to the United States and Europe recorded substantial gains. Rates to New York rose by 14%, while rates to Rotterdam increased by 11%. Drewry expects freight rates to continue rising in the coming weeks. The SCFI confirms this trend, with very strong increases on routes towards Southern Europe, South America and Northern Europe.In addition to geopolitical tensions, the early start of the peak season is also playing a major role. Shippers are bringing volumes forward out of fear of further disruptions and higher freight rates later in the year. This is rapidly increasing pressure on available capacity. Shipping lines are responding with blank sailings and active capacity management, keeping the market artificially tight.Chinese export developments are also supporting the market. Despite global uncertainty, Chinese industry is continuing to perform relatively strongly, and solid export figures are expected. Combined with higher energy prices, this is creating a situation in which both demand and costs are rising, supporting the current upward trend in container freight rates.Higher container prices are now also affecting the European logistics chain. Road hauliers are facing rising diesel prices, congestion in the Port of Rotterdam and the upcoming truck levy. Figures from Statistics Netherlands (CBS) and Panteia show that costs in the road transport sector are rising faster than rates, putting further pressure on margins.ABN Amro is therefore viewing the situation in the logistics sector with increasing concern. According to sector specialist Bart Banning, geopolitical uncertainty, shifting trade flows and temporary overcapacity are causing strong fluctuations in volumes and rates. Container logistics in particular remains vulnerable, as this segment is highly price-sensitive and is also suffering from port congestion.Costs rise sharplyABN additionally warns that costs per kilometre continue to rise sharply due to higher wages, increasing diesel prices and the introduction of the truck levy. According to Banning, some clients may therefore seek alternatives or reduce transport purchases. Companies without effective diesel or fuel surcharge clauses are particularly exposed. According to ABN, transport operators that are unable to pass on rising costs could quickly run into financial difficulties.The air freight sector is also increasingly being affected by the crisis. Due to high kerosene prices and limited fuel availability, airlines are cancelling loss-making routes and adjusting their networks to secure access to fuel, particularly towards Southeast Asia.Although global air freight capacity is recovering from the sharp decline seen at the start of the conflict, it still remains below last year’s levels. At the same time, the Freightos Air Index remains approximately 30% above pre-war levels, with routes from South and Southeast Asia to Europe and North America remaining under particularly heavy pressure. Uncertainty also persists on the trade side. The US Court of International Trade recently ruled the temporary 10% US import tariffs invalid, but the White House immediately filed an appeal. As a result, uncertainty remains regarding future Section 301 tariffs and broader US trade policy. For shippers and logistics providers, this is once again creating concerns around inventory building, trade flows and transport planning.