Global sea freight prices have embarked on an unprecedented trajectory at the start of 2024, experiencing significant spikes not witnessed since November 2022. This abrupt surge follows a series of price increases throughout the last quarter of 2023, shattering the downward trend that prevailed.
Soaring costs
As of January 4, 2024, the Baltic Index, a crucial measure for sea freight prices, reported an astonishing 85 percent increase compared to the week ending December 29, 2023. The average cost of shipping a 40-foot container has skyrocketed to $2,490, marking a sharp contrast to the previous week’s $1,341.
Meanwhile, the Drewry WCI composite index reveals a 61 percent surge in prices on January 4 compared to December 21, 2023. The average cost of a 40-foot container has surged to $2,670 from $1,661, painting a picture of rapid escalation.
Moreover, the Drewry WCI composite index indicates that the current price level of $2,670 for a typical 40-foot container is a remarkable 88 percent higher than pre-COVID-19 pandemic average prices of 2019, which stood at $1,420.
Before this dramatic increase, the sea freight market had experienced fluctuations due to geopolitical tensions throughout the last quarter of 2023. Despite these price increases, the year-end levels were still lower than those observed at the close of 2022.
According to the Baltic Dry Index (BDI), global sea freight prices dropped by approximately 37.7 percent over the past year. The cost of shipping a 40-foot container reached $1,341 in the week ending December 29, 2023, compared to $2,152 at the close of 2022.
Read: Maersk suspends shipping through Red Sea and Suez Canal
Global routes
According to the Drewry WCI composite index, sea freight prices have not surged uniformly across all routes. From Shanghai to Rotterdam, there was a staggering 115 percent increase, reaching $3,577 per container. Meanwhile, sea freight prices from Shanghai to Genoa increased by 114 percent, rising from $2,222 to $4,178. In addition, prices from Shanghai to Los Angeles rose by 30 percent, amounting to $2,726 per 40-foot container. Whereas, prices from Shanghai to New York jumped by 26 percent, reaching $3,858 per container.
Notably, not all routes experienced the same level of turbulence. Sea freight prices from Rotterdam to Shanghai increased by 17 percent, totaling $546 per container. Meanwhile, prices from Rotterdam to New York saw a more modest increase of 2 percent, reaching $1,503 per container. Surprisingly, sea freight prices remained stable for shipping from Los Angeles to Shanghai and from New York to Rotterdam.
The unexpected surge in sea freight prices at the beginning of 2024 raises concerns for businesses globally. It introduced new challenges to an already dynamic and complex trade landscape. The varying impacts on different routes highlight the need for strategic planning and adaptability in the face of such volatile market conditions.
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