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Shipping Prices Soar 343%: Red Sea Crisis Triggers Major Shakeup in Global Shipping Market

In the second quarter, which is typically a low season for the international shipping market, an unusual phenomenon occurred. Due to the ongoing Red Sea crisis, global container shipping prices soared, greatly impacting the futures market. The main futures contract of the Shanghai Shipping Exchange Containerized Freight Index (European Line) has increased by 343.79% year-to-date, reaching a new high since its listing. This abnormal trend has sparked widespread attention and discussion regarding the future direction of the shipping market.

Red Sea Crisis Causes Soaring Shipping Costs

The escalating Red Sea crisis has severely affected shipping through the Suez Canal and the Gulf of Aden. Data shows that from June 22 to 28, the Suez Canal’s container ship throughput fell by 91% year-on-year, and the Gulf of Aden’s container ship arrivals decreased by 92% compared to the same period last year. To mitigate security risks, many shipping companies have chosen to reroute around the Cape of Good Hope in Africa, significantly increasing voyage times and transportation costs. For example, the spot rate for a 40-foot container from Shanghai or Qingdao to Rotterdam, Netherlands, in July is generally around $8,000, more than five times higher than before the Red Sea supply chain crisis in November last year. This cost surge is directly reflected in shipping prices, driving container shipping prices continuously higher.

Supply and Demand Imbalance Exacerbates Market Volatility

In addition to geopolitical factors, the imbalance between supply and demand is also a crucial factor driving up shipping prices. On the one hand, the bottoming recovery of the US and European economies has led to restocking demand, stimulating commodity imports. On the other hand, the effective supply of shipping capacity remains tight and is unlikely to ease in the short term. Huang Liunan, a researcher at Guotai Junan Futures, pointed out that the supply-side capacity replenishment may not be completed until the end of 2024. Until then, unless there is a significant contraction on the demand side, the market is likely to remain bullish. This supply-demand imbalance, coupled with the uncertainty of the Red Sea crisis, further intensifies market volatility. The shipping industry is facing unprecedented challenges and opportunities, requiring market participants to closely monitor the situation and adjust strategies promptly to cope with the rapidly changing market environment.

[Source – 上海有色网] 海运价格飙升343% 红海危机引发全球航运市场大洗牌 https://news.smm.cn/news/102837567

 

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