CONTAINER spot freight rates appear to have peaked from recent highs and are now beginning to soften, according to data from the Shanghai Containerised Freight Index.

The SCFI’s index fell back 60 points, or 2.7% this week, the first fall since last November, when rates started their sharp ascent on the back of disruptions to Red Sea services.

That shock saw rates rise at a faster rate than they had even during the heady days of the pandemic. But even though the SCFI rose by 125% in just two months, it remains at less than half the level it peaked at early in 2022.

Rates on Asia-Europe and Asia-Mediterranean trades, those most directly affected by the closure of the Red Sea routing, were down 5.6% and 4%, respectively and now stand at $2,861 per feu and $3,903 per feu.

On the US trades, rates rose again, but at a lower pace than in recent weeks. Asia-US west coast services were up $32, or 2.1%, to 4,412 per feu, while Asia-US east coast rates, which are affected by both the Red Sea and the Panama Canal, rose $151, or 2.4% to $6,413 per feu.

Drewry’s wider World Container Index, reported a small 5% increase this week as the pace of change was reflected in its rates too.

While Drewry noted increases on the majority of the trades it covers, it too noted that it expected spot rates to plateau or decline in the next few weeks on routes from Asia.

As Lloyd’s List reported this week, the Red Sea crisis appears to have reached an inflection point in terms of its impact on freight rates in the lead up to the Chinese New Year holidays.

A number of analysts expect rates to continue to decline, particularly after February, although higher costs faced by carriers will ensure that they settle at a higher point than the loss-making levels seen before the recent increases.

Carriers will be keen to keep as much of the rate increase as possible when rates do establish a new equilibrium, however.

The recent turn of events has been positive for the sector’s outlook, which had until the crisis been predicated on expectations of low demand and overcapacity.

Clarksons’ estimates that the current rerouting is providing a 9% uplift to teu-mile demand, which affects the capacity required by carriers, although the full-year impact will be dependent on how long rerouting lasts.

“Our base case assumes one quarter of disruption, equating to a 2% full-year 2024 teu-mile demand uplift, but longer-lasting disruption would clearly have a greater cumulative impact,” it said.

But it warned that once the disruption eased, underlying supply-demand trends could start to re-emerge.

Nevertheless, the first half of this year at least is likely to be positive for carriers. Analysts at HSBC said while the disruptions could last throughout the first quarter, the impact on freight rates would last longer.

It expects carriers will be looking at earnings margins of 20%-30% off the back of the disruptions in the first quarter, a far cry from the losses being predicted by lines themselves in the second half of last year.