Ocean freight rates are expected to hit record highs due to a confluence of global factors, according to industry reports. These factors include:
- The ongoing crisis in the Red Sea is causing port congestion.
- Congestion in key ports, particularly in Asia and the Middle East.
- An imbalance in container positioning, with a surplus of empty containers in some regions and a shortage in others.
- Strong global demand for container shipping.
The Drewry World Container Index, a key benchmark for ocean freight rates, has doubled year-on-year so far in 2024. Rates on major routes from China have also surged significantly compared to both last year and pre-pandemic levels.
Shipping companies are raising their profit forecasts due to the strong demand and high rates. For example, Maersk has increased its annual earnings guidance by 50-75% due to these factors.
Indian ports have seen mixed results, with some experiencing cargo growth and others facing declines. However, a major port expansion is planned to handle future increases in cargo volume.
The report also highlights the potential of Chabahar port development as an alternative route to navigate disruptions in the Red Sea.
Overall, the outlook for ocean freight rates is for continued increases in the near term due to strong demand and limited capacity.
