Container Rates Peaked, Dry Freight Keeps Rising

Global shipping rates declined again last week and despite continued attacks on shipping around Yemen, appear to have already peaked, as global trade growth remains soft. But contracts are usually agreed in March and so developments this month are likely to be important.

• Rates are sharply higher than a year ago but well below the increases seen in 2021 but they had been disinflationary until late last year. It is an issue central banks are watching, but as the RBNZ said expect to normalise and it’s second round effects that matter.

Source: MNI - Market News/Refinitiv

• Last week the Baltic dry index rose 18.1%, the fourth consecutive weekly increase and is now up 5.2% since the end of 2023. February was up over 150% y/y, in comparison May 2021 rose over 500% y/y.
• FBX container rates in contrast fell over February with the global measure up 15% m/m and the China/east Asia to east coast North America route +32% but to the Mediterranean fell 6%. The global rate fell 2.6% w/w last week, the third consecutive weekly decline.
• Asia to Mediterranean container shipping rates have fallen for six weeks straight declining 6.6% w/w last week but are still almost 100% higher than the end of 2023. In February they rose 75% y/y but in August 2021 they were up almost 600% y/y. While the disinflationary pressure from shipping on European inflation has ended, it was negative from August 2022 to December 2023, the recent easing signals that container rates are unlikely to be a threat.
• China/east Asia to east coast North America route remains 162% above end 2023, despite falling for the last three weeks.