Freight Rates to Stay High Next Year, Predicts Drewry

Some three million teu of new tonnage arriving next year will most likely be “more than offset” by further market disruption, ensuring no respite for embattled shippers, according to Drewry.

As the prospect of more US east coast port strikes remains uncertain, the maritime consultancy drew up scenarios with a strike in January and without one, and found that in both models, freight rates would continue to rise.

Port strikes “will have significant inflationary impact on spot rates, not just on the US connected trade, but also by contagion on the other trades”, said Drewry’s Philip Damas.

“If there is no port strike, some spot rates will decline, but overall we believe there will be sufficient other factors, such as the increased emission trading system carbon taxes, which will increase by 75% from January.”

He added: “So it’s a bit of a return to increases in rates at a slow rate. Now, I should stress that global freight rates increased by 87% between pre-pandemic 2019 and this year, up 87% on average.

“Even if the Suez Canal reopens, we do not expect container freight rates will go back to pre-pandemic levels.”

Mr Damas acknowledged that a reopened Red Sea would increase shipping capacity by about 25%. But Drewry does not expect this to happen, rather that the disruption and Cape of Good Hope routing will continue until at least 2026.

“We have extended the timeline for a resumption of full-scale Suez Canal transits to 2026,” confirmed Mr Damas.

“We anticipated previously that it would be resolved by the first half of 2025… we’re seeing escalating tensions in the Middle East and we don’t see any reason to be optimistic on this front.”

On top of the strain from the Red Sea and possible strikes across the US east coast, next year’s reconfiguration of shipping alliances is expected to cause an additional setback, with Mr Damas describing MSC as “a sort of quasi single-carrier network alliance”.

“Watch for the schedule integrity of Gemini, which will be consumer-dependent,” he advised. “We have said in the past based on our experience, that container transhipment operations can quickly get caught up with delays and missed connections.”

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