Forecast for boxship freight rates draws mixed views from industry watchers

[SINGAPORE] Would boxship freight rates, which have dipped more than 40 per cent year to date, rebound or extend their declines? Industry watchers are divided on the direction, with some expecting the cost of shipping containers to rise as early as May – provided that the Red Sea remains unsafe for voyages.

Pelaris Cheng, managing director of Singapore-based freight forwarder Hermes Logistics, told The Business Times that she has been able to enjoy 40 to 50 per cent lower rates this year for shipments to Europe and South America. This is because the demand from China – which competes for container space – has eased, even after the Chinese New Year holiday break.

She heard that China is shipping less because of US tariffs, but freight rates to the Middle East have ticked up as Chinese companies increase their shipments ahead of Ramadan.

Both the Drewry’s World Container Index and the Shanghai Containerized Freight Index have slid more than 40 per cent since January to US$2,264 per 40-foot container and US$1,292.75 per 20-footer, respectively, as at Mar 21.

The composite Drewry’s World Container Index tracks weighted average spot rates on eight east-west routes, and its latest reading was the lowest in 15 months. The Shanghai Containerized Freight Index, meanwhile, follows 13 export trades out of Shanghai, and is the world’s most widely used benchmark for spot-market ocean-freight rates for shipments out of China.