Year-on-year surge in freight rates observed in October 2024
3 weeks ago
Year-on-year surge in freight rates observed in October 2024
Container freight rates have experienced significant fluctuations between January 2023 and October 2024, as highlighted by the Statista Research Department.
On October 26, 2023, freight rates plummeted to a low of just $1,342 for a 40-foot container. However, a remarkable recovery followed, with rates soaring to over $5,900 in July 2024, marking the highest recorded value. As of October 10, 2024, rates had adjusted to $3,349 per 40-foot container.
The global supply chain is a delicate network of interconnected links, where disruption to one element can trigger cascading effects throughout the system. The COVID-19 pandemic served as a significant shock, halting entire industries and severely impacting supply chain efficiency. Container shipping, with its intricate and transcontinental nature, was particularly vulnerable. Since the onset of the pandemic, the industry has faced numerous challenges, including port closures, congestion, labor shortages, capacity utilization issues, and a scarcity of new shipping containers. More recently, the ongoing conflict in the Middle East has further complicated the landscape by affecting oil exports, adding pressure to an industry striving for recovery.
While operating costs for container fleets have risen, the increase in freight rates has not solely been a response to these expenses. Container shipping companies have reported record-high operating profit margins since the pandemic began. Yet, despite these high margins, the freight rate surge has had its consequences. In the second quarter of 2023, major container shipping firms reported an average profit margin of 8.9%, nearly a 50% decline from the peak EBIT recorded in the first quarter of 2022. In response to this trend, some carriers are utilizing their previous profits to expand their capacity by purchasing new containers and ordering additional ships. However, the delivery of these newly ordered vessels is still several years away.
Source: DailyFT