Early peak season pushes container rates higher

Container freight rates continue to rise, with the peak season starting earlier than usual this year. Higher bunker prices, emergency fuel surcharges and growing risks around the Strait of Hormuz are also contributing to rising freight rates across major trade lanes.After the Drewry World Container Index surged by 12% last week, the index increased by another 6% this week to $2,712 per 40ft container.The increase is mainly driven by developments on the Asia–Europe trade route. According to Drewry, spot rates on this lane rose due to the early onset of peak season demand and higher FAK (freight all kinds) rates. Freight rates from Shanghai to Rotterdam increased by 15%, while rates from Shanghai to Genoa rose by 10%. On the Transpacific trade route, freight rates increased only marginally this week. However, early signs of the peak season are also emerging on this lane, leading Drewry to expect further rate increases in the weeks ahead. The peak season is therefore starting earlier than usual this year.Although bulk freight rates have declined over the past week, prices are still up 10.8% on a monthly basis and 121% year-on-year. Drewry expects container freight rates to continue rising in the coming weeks.Number of transits through the Strait of Hormuz increasedEmergency fuel surcharges and elevated bunker costs are also pushing container freight rates higher. According to Lloyd’s List data, the number of transits through the Strait of Hormuz increased significantly in Week 20, rising to 54 transits (21 dark and 33 traceable vessels) compared with 25 transits in Week 19 (17 dark and 8 traceable vessels).India, South Korea and Japan have negotiated exemptions for some shipments, but China stood out this week, accounting for nearly half of all vessel transits through the Strait of Hormuz, according to Richard Meade, Editor-in-Chief of Lloyd’s List, during a recent webinar.Still, transit volumes remain only a fraction of normal levels. With roughly one-fifth of globally traded oil usually passing through the Strait of Hormuz, bunker fuel prices remain elevated.Ongoing rerouting around the Cape of Good Hope instead of the Red Sea is also continuing to support elevated freight rates. Longer sailing distances are increasing fuel consumption, tightening vessel capacity and extending transit times on Asia–Europe trade routes.