Have Ocean Spot Rates Peaked?

Have Ocean Spot Rates Peaked?

In the initial six weeks following the Houthi attacks, the Global Composite Index, as reported by Drewry, surged by an impressive 170% to reach $3,732.70 per twenty-foot equivalent unit (TEU), marking the index's highest level since September 2022.

These rapid spikes in spot rates are expected to yield significant short-term gains for carriers with spot exposure, effectively outweighing any cost increases incurred from rerouting around the Cape of Good Hope instead of utilizing the Suez Canal.

Image: FreightWaves SONAR: Freightos Baltic Daily Index - Global (White) and Drewry World Container Global Composite (Blue)

Spot Rates Peaked?

However, recent weeks have seen a decline in global spot rates. While not drastic, these declines signal the conclusion of the pricing power observed throughout January. The Drewry World Container Index – Global Composite has dipped by 6% from its recent peak of $3,964.18 per FEU in the week of January 25. Similarly, the Freightos Baltic Daily Index – Global has experienced a slight decrease of just over 1% during the same timeframe.

Given the ongoing conflicts in the Red Sea and the continued scheduling of routes by ocean carriers around the Cape of Good Hope until at least April, the post-Lunar New Year recovery will be crucial in determining the trajectory of ocean container spot rates in the coming months.


Courtesy: FreightWaves