Freight rate volatility rises but remains below Covid levels

The increasing volatility in freight rates caused by the Iran war is not comparable in scale to the extreme freight rate inflation of the Covid period, according to analysis from Drewry Shipping Consultants.

According to Drewry Container Freight Rate Insight data updated yesterday, spot ocean rates on East-West and North-South routes during the peak of Covid shipping disruptions in 2020 were both higher and more volatile than those experienced by typical spot market shippers in the first month of the Iran conflict.

“Unlike the airfreight market, the container shipping market has not seen a significant fall in capacity after the start of the Iran war, except for capacity to and from the Gulf,” said Philip Damas, Head of Drewry’s logistics practice. “Therefore, we believe that the increase in ocean rates on non-Middle East-connected routes will be manageable and shippers should not panic,” he added.

Drewry Container Freight Rate Insight data shows that, on Middle East-connected routes only, ocean rates are experiencing Covid-level volatility and are currently at even higher freight rates. Rates may soften as opportunistic pricing adjusts.

Across all routes, Drewry advises beneficial cargo owners that timely rate data and market insight are important for managing rising bunker surcharge costs. With accurate market intelligence and bunker policies, shippers can anticipate and contain fuel surcharges and mitigate overall rate increases. Drewry has recently launched a BAF forecasting service to support budgeting.

Full benchmarking data on spot ocean freight rates are available through Drewry Container Freight Rate Insight. Combined with Drewry’s ocean data products, shippers can use this information to negotiate freight solutions.

Container Shipping Webinar: Wednesday, 15 April
This briefing will explore the impact of the Middle East conflict on the container shipping market and its stakeholders, as well as potential long-term effects on industry operations. Sessions will be held at 0900 (BST) and 1600 (BST) on Wednesday, 15 April.