The freight trading platform Container Xchange has reported substantial increases in ocean container shipping rates from China following attacks by militants in Yemen, affecting cargo ships in the Red Sea. Between November of the previous year and February 2024, rates surged by more than 200 percent. Despite these hikes, Container Xchange has noted a decrease in freight rates post-Chinese New Year holiday period, predicting a fall of 8 percent to 16 percent in China during March and April, reflecting the cyclical nature of price developments after the holiday demand reduction.
This change is part of a broader trend observed across global shipping routes, with potential rate declines anticipated in the United States, Canada, and Europe over the following two months. The impact of high shipping costs is particularly relevant for the recycling and basic materials industries, where availability and positioning of containers are crucial. For example, in the recycling sector, higher shipping prices signal a scarcity of containers, which can affect the cost and logistics of transporting materials like old corrugated containers (OCC), recycled-content plastic pellets, and scrap metals to Asia.
Container Xchange’s survey in February revealed a divided response to recent rate volatility; 63 percent of companies are looking to diversify their supplier portfolio, whereas 37 percent intend to reduce their number of suppliers, reversing the diversification trend sparked by the pandemic. This scenario illustrates the challenges and strategic shifts facing the shipping industry in response to geopolitical tensions and trade pattern changes.
As a result of the persistent Red Sea attacks, trade patterns have shifted, affecting the import and export of scrap materials. Some buyers in China now prefer North American nonferrous scrap over European shipments, while buyers in India are looking towards materials from Malaysia, Japan, or Australia to avoid the troubled Red Sea route.
The fluctuations in container booking prices, with increases in Northeast China, Australia, New Zealand, and Southeast Asia, and declines in Europe, Japan, Korea, and the Middle East/Indian subcontinent region, reflect the dynamic nature of the global shipping industry. Container Xchange anticipates a continued, though not drastic, decline in freight rates into April, with variations depending on location, highlighting the complex interplay of market forces, geopolitical events, and industry responses.
Credits:
- Recycling Today, Container rates predicted to be at their peak – Recycling Today.
