Freight rates for transporting a container from China to Europe up 160%

Freight rates for transporting a container from China’s ports to Europe have increased by 160% since January 1, as ships are forced to reroute around the southern tip of Africa, following the attacks of the Houthi rebels in the Red Sea, European shipping sources stated to “Naftemporiki.”

“The cost of transporting a container from Shanghai to the port of Rotterdam in the Netherlands has doubled since last November and costs 4,400 US dollars,” the same sources noted.

But freight costs are still far from the 15,000 US dollars per container paid in 2022, which coincided with Covid, S&P Global’s head of maritime research Rahul Kapoor said.
On the route between China and the west coast of the United States, the cost has increased by only 30%, to 2,800 US dollars per container. This increase is due to the delays of ships in the Panama Canal, as the drought affecting the country has reduced the amount of water in the canal. The route between Rotterdam and the West Coast of the United States has also barely registered a significant change so far, which reinforces the idea that the European economy has a new point of tension at a cost not visible in the United States.

The re-routing around Africa translates into higher fuel costs and more time for vessels, resulting in a 12% drop in container supply, according to investment bank Stifel. “Continued tension in the Red Sea is also expected to lead to an increase in premiums for the entire industry,” Alliance Global Partners also reported.

Several analysts are also talking about an increase in shipping company profits for this year due to rising freight rates. “These developments could increase the profits of shipping companies by several billions, even if the tension lasts only two or three weeks,” explained the head of the international logistics company OL, Alan Baer.
Turning to air transport

Due to the Houthi attacks, logistics companies are even registering a growing demand for air freight. “The first customers have already switched to a combination of sea and air transport,” said the vice president at logistics group Kuhne Nagel. Goods arriving in containers from Asia are reloaded from ships onto planes in Dubai or Los Angeles. That shift could gain momentum in the coming weeks, he estimated. “If the situation at Suez does not return to normal in the next two weeks, we expect supply chain disruptions due to longer transit times and a lack of containers going back to Asia.”

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