Shanghai Containerized Freight Index (SCFI)
The Shanghai Containerized Freight Index (SCFI) is an important indicator of container freight prices from Shanghai to the rest of the world. Recent developments in SCFI show significant fluctuations, reflecting the current challenges in the market.
Continued Increases in Rates
Ocean freight rates have continued their upward trend, which can be seen in the latest data from SCFI
This increase is due to several factors, including delays in port operations, supply chain bottlenecks and geopolitical tensions, particularly in the Red Sea. This has resulted in increased costs for importers and exporters, which significantly affects the bottom line.
Analyzes and Expectations
Historically, similar increases have been observed during the Covid-19 pandemic, where freight prices also increased significantly due to supply chain disruptions and high demand for goods. As then, freight rates are unlikely to decline significantly until a solution to the current geopolitical tensions and capacity issues is found.
The Geopolitical situation in the Red Sea
Mikkel Rosenvold, Partner & Geopolitics, Steno Research, comments on the geopolitical situation
"The current geopolitical tensions, especially in regions such as the Red Sea, have significantly affected the freight market. Just as during the Covid-19 pandemic, we are seeing significant fluctuations in freight prices, which are not expected to decrease until a solution to these geopolitical challenges is found. Originally, the expectation was that a peace deal in Gaza would cause the Houthis in Yemen to stop their attacks on ships in the Red Sea, as the Gaza war was the stumbling block to start the attacks in the first place.But as the Houthis have seen the power and attention they can gain by attacking international shipping also takes on a life of its own and may inspire groups at other bottlenecks such as the Straits of Malacca or along the coast of Africa. Therefore, disruptions to world trade are probably something we must turn to and navigate."
We have recently helped several customers in several industries with imports from the Far East, where we have secured them as best as possible against the current and future increases. This includes both FCL & LCL shipments. If you would like to discuss how these changes may affect your business, or have any questions, you are more than welcome to contact us.
Nicolaj Aarøe - Co-founder & Consultant na@slinkert.dk
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