Further escalations in geopolitical conflicts in the Red Sea are unlikely to have an additional impact on the container market, according to a new Freightos report, noting that majority of carriers are already avoiding the region.
The online freight marketplace said in a recent report that tensions continue to rise in the Middle East, with ongoing US and UK strikes on Houthi targets in Yemen, continued Houthi attacks on Red Sea traffic, deadly Iran-backed attacks on US sites in the region, and US retaliations in Syria and Iraq.
"But with the majority of container carriers already avoiding the Red Sea, these further escalations in geopolitical conflicts are unlikely to have an additional impact on the container market," Freightos said.
It noted that added pressure from pre-Lunar New Year demand for ocean freight is also easing, and carriers continue to make progress in adjusting networks and activating excess capacity to adapt to the longer journeys.
The report said these factors are leading to improvements in space and equipment availability at Asian export hubs, smooth operations at most major ports and few signs of congestion.
"This easing of demand and operations challenges is likewise leading to less pressure on ocean rates," Judah Levine, head of research at Freightos, said.
Meanwhile, the report said Asia to N. Europe and Mediterranean prices declined slightly last week to US$5,000/FEU and US$6,200/FEU, respectively.
Asia to N. America ocean rates increased 7% to the West Coast last week, past US$4K/FEU and 4% to the East Coast to the $6k/FEU level.
"Though demand may increase somewhat after the holiday lull, rates are likely to decline by late February or early March as ocean freight enters its slow season and carriers will have had time to fully adjust capacity and networks on the diverted lanes," Levine said.
"Prices should be expected to remain higher and transit times longer than normal until Red Sea traffic resumes," he added.
The Freightos report said disruptions to ocean freight have led to some shifts to air cargo, as reflected in increased air volumes on some lanes recently.
Freightos Air Index data show China - N. America air cargo rates climbed 14% last week to US$6.06/kg, and are slightly higher than in early December.
While China - N. Europe prices dipped last week, Middle East – to N. Europe prices are still 20% higher than in mid-January, possibly reflecting some ocean-to-sea-air shift.
"Air cargo demand should also ease as LNY begins and Red Sea-driven air demand should subside as well as ocean operations continue to stabilize," Freightos said.
