10 Freight Pricing Trends for H2 2024

1. Capacity Constraints and Network Readjustments Post-Crisis:

Despite current capacity shortages, concerns about overcapacity persist due to the expected glut of capacity entering the container shipping market in 2024 and 2025.

Effective capacity remains constrained due to widespread rerouting to avoid the Red Sea, absorbing most of the new capacity and leading to a situation where there aren't enough ships to transport goods normally.

Even after a resolution to the crisis, it will take time to readjust networks, with shipping lines possibly taking six to 12 months to achieve a stable situation of services running through the Suez Canal.

Impact: The capacity constraints and network readjustments post-crisis necessitate strategic planning and collaboration among industry stakeholders to optimize capacity utilization and enhance supply chain resilience amidst evolving market dynamics.

Additionally, new vessel deliveries are outpacing cargo volume growth, with a projected fleet growth of 9.5% in 2024 and 4.9% in 2025.

2. Impact of Red Sea Conflicts:

The conflicts in the Red Sea have led to vessel diversions around southern Africa, absorbing a substantial portion of global capacity.

Estimates suggest that 6% to 7% of global capacity is being absorbed by these diversions.

3. Rate Volatility and Resilience:

Despite concerns about overcapacity, spot rates on key trade lanes have experienced significant volatility.

For example, spot rates on the Asia-North Europe trade surged by 13% in a week, reaching a current rate of $3,671 per FEU, representing a 143% year-over-year increase.