Global spike in freight rates; Sri Lanka yet to witness major challenges
Mr. Nilud Fernando
Ocean freight container shipping spot rates are expected to reach the levels that were seen during the COVID-19 crisis when the latest round of increases in the market become effective by mid-June, especially from Far-East China to USA and Europe trade lanes and later to the Indian Subcontinent, according to a logistics expert.
Nilud Fernando, a professional in international shipping and logistics, a marketer, business consultant, trainer and coach, told the Business Times this week that by mid-June 2024, spot rates will rise to levels of that seen in 2022 when the COVID-19 pandemic was wreaking chaos across ocean freight supply chains.
“We in the shipping and logistics industry foresee that there is an assortment of uncertainty and disruption across global ocean freight supply chains at present and this is fueling the spot rate increases. However, it is the speed and magnitude of this recent spike that has taken the market by surprise. Key reasons being huge congestions at key transshipment ports, Red Sea circumstances which generates longer transit times per turnaround times, limited ship capacity deployments and equipment (20 and 40 feet container shortages),” he said.
He also mentioned spot rates have also increased on the Far-East to North Europe trade, reaching US$5,280 per 40 footer in June compared to $4,839 in February which is an increase of 63 per cent since April.
From the Far-East to USA, average spot rates have escalated up to $5200 per 40 foot container, phasing out the spot rate of $4800 which was at the height of the Red Sea crisis in February 2024. In May 2024 ocean freight shipping market observed a rapid escalation. Trade is expected to come up with the increase in freight rates which was non-projected before.
The early dawn of the peak season is adding to the assortment of uncertainties in the market. Beginning in 2024, the Red Sea crisis was blamed as the root cause of spot rate increases, this time it is far more delicate. There is a knock on impact and unforeseen circumstances which serve to fan the flames of uncertainty throughout the container shipping industry, he noted.
On the other hand cargo traffic from Sri Lanka is yet to witness a huge spike in demand for ship space thus far unlike Far-East China. Sri Lanka is geographically well placed as an ideal logistic hub in the region to cater to its neighbouring nations with its trans-shipment volumes mainly to USA, Europe, Mediterranean trades. Market volumes and compositions are different to other origins as demand for ship capacity comes later than other locations. “I foresee application of higher rates unlike other Far-East locations that would emerge weeks later than others for multiple reasons,” stated Mr. Fernando.
He stressed that the US in its recent tariff restrictions to Chinese goods may pose a threat to its volumes and that is fueling the 2024 peak season for cargo rush prior tariff effective dates.
Optionally volumes could be outsourced to other locations such as Vietnam and Burma. “Sri Lanka should keep a closer look at those developments by tapping upcoming events, provided the right infrastructures are in place to move on.”
Many shipping and logistics analysts call this era as ‘COVID Junior’ as key premier trade lanes freight rates could reach to $10,000 to $12,000 per 40 foot container as unprecedented congestions at key transshipment hubs, red sea crisis, vessel turnaround times, limited vessel capacity and equipment contribute largely to this rate of hike.
Hitad.lk has you covered with quality used or brand new cars for sale that are budget friendly yet reliable! Now is the time to sell your old ride for something more attractive to today's modern automotive market demands. Browse through our selection of affordable options now on Hitad.lk before deciding on what will work best for you!