CONTAINER spot freight rates continued to climb this week as the amount of available capacity ex-China and available equipment become difficult to find.

The Shanghai Containerised Freight Index rose by another 16% this week, reaching 2,206 points. This marks the first time the index has stood at over 2,000 since freight rates began their dramatic falls in September 2022.

The main gains were not seen on the Asia-Europe trades, which have already seen noticeable hikes since the attack on shipping in the Red Sea began. Instead it was cargoes to the US, both to the west and east coasts that reported increases of over 40%.

Rates from Asia to the US west coast now stand at $3,974 per feu, while rates to the east coast, which are affected by both the Red Sea and Panama Canal disruptions, rose to $5,813 per feu.

Carriers are pushing ahead with rate increases where they can on the back of constrained capacity over the coming weeks, as vessels diverted from the Red Sea are delayed in returning to ports of origination in Asia.

Drewry’s World Container Index also surged this week, rising another 15% to £3,072 per feu, following a 61% increase last week.

According to Drewry rates on Asia-Europe and Asia-Mediterranean are now up by over 200% since mid-December when the Red Sea crisis began to escalate. Its Shanghai-New York index, which also uses the Suez Canal is up by over 45% in the same period.

Capacity is set to remain extremely tight for the coming weeks, indicating that freight rates will stay at least as high as they are now until Chinese New Year.

“Diversions will result in an expected capacity shortfall of up to 40% for departures from Asia to Europe and the US east coast in weeks four to six, with freight rates expected to surge further over the coming weeks,” said analysts at Linerlytica.

“The delays have also affected the availability of containers returning to Asia, with new box production rising sharply since December while prices of new equipment has jumped by over 20% in the past month. The only relief will come from new vessel deliveries, with the run rate rising to over 250,000 teu a month and a full year delivery schedule of 3.2m teu due in 2024.”

Xeneta chief analyst Peter Sand warned that securing reliability and stability in ocean freight shipping during a black swan event such as the Red Sea crisis would come at a cost.

“Shippers are being told agreements on long-term rates will not be honoured and are being pushed onto the spot market,” he said. “The budgets they agreed, sometimes as recently as last month, can be thrown out of the window.”

He added that the oversupply of container shipping capacity in the market in 2023 might not be readily available to save the day, either.

Vespucci Maritime chief executive Lars Jensen said that a shortage of equipment would be a key factor in holding up rates.

Delays to return voyages meant there would be a shortfall of up to 780,000 teu of equipment due to arrive in Asia prior to Chinese New Year.

“This is a major factor in pushing up spot rates,” he said. “A shortage of equipment also means that the upwards rate pressure will spread to all export trades out of Asia and not just trades going around Africa.”

Nevertheless, he is among voices that expect rates to stabilise as networks are restructured and capacity increased.

“Once we are past Chinese New Year, the seasonal drop in demand will allow equipment and vessels to reach a normal equilibrium within a few weeks and the market will settle into the medium-term outlook,” he said.

“Part of settling into new longer networks will also mean carriers will reallocate more vessels to Asia-Europe services. This leads to vessels being removed from low-paying trades such as Atlantic, in turn causing a domino effect whereby such trades will also see increasing freight rates.”

Moreover, much of the current peak in rate may be psychological, as rate increases are far outstripping the actual increased costs caused by diversion.

“Fear rather than facts could be driving the rise in container markets,” said MSI container market analyst Daniel Richards, adding that the impact on freight and charter rates will be significant if the disruption continues in the Red Sea.

MSI said that the increase in rates was greater than could be justified by increased costs from Cape of Good Hope, and suggested “a combination of panic, or an attempt to secure space in the coming weeks” when vessels would be delayed returning to Asia.