By Vincent Wen    Photo：CANVA

In recent times, ocean freight rates on routes between Europe, North America, and South America have seen a sharp increase, yet despite the surge in prices, securing cargo space remains challenging. This is primarily due to strategies employed by shipping companies, resulting in a shortage of market capacity, where even high prices do not guarantee available space.

Although the ocean freight market still experiences excess demand, factors such as the crisis in the Red Sea have led to a rise in prices for European routes, subsequently affecting rates for American routes as well. Furthermore, long-term contracts for American routes starting from May 1st have been signed, with contract prices showing a slight increase compared to last year.

Earlier reports of new vessel plans in the market anticipated a drop in freight rates due to increased capacity on European routes. However, these plans are currently on hold due to the Red Sea crisis. Even if new capacity were to be introduced following a ceasefire in the region, it would take over three months for this to impact American routes, indicating that prices are unlikely to be affected by increased capacity until the fourth quarter.

Another significant factor affecting prices is the shortage of containers. Many containers are currently stacked in Europe, primarily due to BYD's extensive exports of electric vehicles to Europe. However, weak market demand, pricing, and quality control issues have resulted in product stagnation, leading to a pile-up of cars at European ports. With numerous cargo owners opting not to retrieve their goods due to stagnation, containers in the Asian market are in short supply. Additionally, as BYD continues its shipments, there is a possibility of further pushing up ocean freight prices.

Although demand for goods transportation in the market has yet to return to pre-pandemic levels, prices may not necessarily begin to decline as expected following the May 1st Labor Day holiday in China, due to various influencing factors.
 

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