Middle East tensions push container freight rates to two-year high
Date
7/21/2024 5:51:12 AM
(MENAFN) A recent study by Allianz Trade has highlighted a significant surge in container shipping rates, which have reached their highest level in two years due to ongoing geopolitical tensions in the Middle East. Following a period of steady decline over the first three months of the year, average freight rates for a standard 40-foot container have skyrocketed by 121 percent since January, now standing at USD5,901. This rate is nearly four times higher than the rates observed in 2023, marking the steepest increase since August 2022.
Maria Latorre, a sector expert at Allianz Trade, attributed the persistent high transport costs to the ongoing conflicts in the Middle East, particularly in the Red Sea. She noted that attacks by Houthi rebels on vessels in the Red Sea have been a primary factor driving up shipping prices, as ships are forced to take longer, more circuitous routes around Africa to avoid the conflict zones. This situation has led to broader disruptions in supply chains, delays in deliveries, and congestion at various ports.
While increasing demand and the sluggish recovery of global trade contribute to the rising transport costs, these factors account for only about 15 percent of the overall increase. In contrast, falling oil prices, which had previously driven up freight rates in 2022, are now having a less significant impact on current rates. Container shipping companies are currently benefiting from these elevated prices, whereas European firms heavily reliant on Asian imports are particularly vulnerable to disruptions in critical chokepoints like the Red Sea, unlike their American counterparts.
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