Freight rates soar 📈 👀

PLUS Maersk airline set to unleash its first 777 freighters ✈️

Author

Ben Thompson
May 23, 2024

In partnership with

Ahoy Friends !! Unfortunately it’s the words no shipper wants to hear: “Freight Hikes”, but it’s this weeks focus as we see ocean container rates climbing back to peak season highs we saw last December. There’s no way to sugarcoat it, so let’s dive in and take a closer look. 🔭

In today’s email:

  • Price Jump: 📈 Container prices are on the rise.

  • I’m Lovin’ It: 🍟 The rise of the world’s largest restaurant chain.

  • On The Move: 🚢 The ship that hit Baltimore bridge finally moves.

SHIPPING NEWS

Freight Rates Spike

Freight rates for China have surged recently and are expected to remain high over the next three to six months due to ongoing container shortages and strong Western demand.

Geopolitical tensions and logistics disruptions in the Middle East have led to higher shipping costs and longer delivery times. Most ocean carriers have halted transits in the Red Sea, opting for the longer route via the Cape of Good Hope, resulting in significant delays and increased costs.

Container shortages in China are intensifying as carriers take longer to return from destinations, causing severe spikes in freight rates. On 17 May, rates from Shanghai to the US west coast and east coast jumped to $5,025/FEU and $6,026/FEU, respectively, showing substantial weekly increases. Rates to South America from Shanghai rose by 22.4%, and to Europe by 6.3%.

The shortage of containers and vessel space is driven by longer transit times and bottlenecks in shipping routes. Freight rates from China to Europe have been soaring by $500-$800/FEU each week since late April, and rates to West Africa have more than tripled, exceeding $8,000/FEU.

Strong demand from the West, especially with the upcoming peak shipping season, is expected to keep rates high. Maersk and CMA CGM have announced rate hikes, while container production in China struggles to keep up with demand. The current shortage is more about slow turnover amid global logistics disruptions rather than undersupply.

Additionally, logistics disruptions are expected to continue as the Red Sea crisis shows no signs of de-escalation. The ongoing geopolitical tensions are causing carriers to adjust their routes, further compounding the delays and increasing costs.

Tight shipping conditions are expected to persist through the third quarter, with a gradual easing of freight rates likely in the fourth quarter, according to industry sources. The combination of strong demand and container shortages will continue to drive high freight rates in the coming months.

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VIDEO OF THE WEEK

The CRAZY Truth About McDonald's

Explore the rise of the world's largest restaurant chain, detailing how Ray Kroc transformed a single drive-in into a global empire. It covers themes of betrayal, fraud, and scandals, including McDonald's unexpected dominance in a separate industry and its encounter with the Italian mafia.

GLOBAL TRADE SNIPPETS

Ship that hit Baltimore bridge on the move again. The ship that slammed into the Francis Scott Key Bridge in Baltimore was re-floated on Monday after being stuck for nearly eight weeks. The Dali was moved by tugboats "under favourable environmental conditions", according to the US Army Corps of Engineers.

Philippines implements single electronic invoicing system for imports. The Philippines government has enforced a single electronic invoicing system for all imported commodities, as it explores non-monetary measures to address rising food prices.

Copper hits all time high but signals weakening trend. After a barnstorming run Copper is showing signs of cooling, one day after reaching an all-time high, with investors cautioning its rally may have been running ahead of weak fundamentals for refined metal.

Maersk Airline Prepares to Deploy First 777 Freighters for Peak Season. Maersk continues to move ahead with plans to grow its air cargo business in 2024 even as many competitors pull back in the wake of a painful downturn.

QUICK CLIPS ON “X”

SHIPWRECK OF THE WEEK ⚓️☠️ 

Launched in 1925, the USS Saratoga (CV-3) served as a Lexington-class aircraft carrier for the U.S. Navy. After a storied career, including significant roles in World War II, it was decommissioned on August 15, 1946. Repurposed for Operation Crossroads, the Saratoga was sunk on July 25, 1946, at Bikini Atoll during atomic bomb tests. Now an underwater attraction, it offers a glimpse into naval history and a habitat for marine life........... Click to see shipwreck 👀

RECOMMENDED READS

The Venture Mindset: How to Make Smarter Bets and Achieve Extraordinary Growth. The Venture Mindset by Stanford Professor Ilya Strebulaev and Alex Dang offers transformative lessons from venture capitalists on decision-making, innovation, and identifying opportunities. The book provides nine principles to help businesses thrive in a rapidly changing world, emphasizing the importance of dissent, failure, and strategic evaluation.

Hook Point: How to Stand Out in a 3-Second World. Hook Point by Brendan Kane explores effective strategies to innovate and scale businesses and build compelling brands in today's micro-attention world. It emphasizes mastering succinct, attention-grabbing communication to fuel brand awareness and growth.

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