Spot freight rates sail to record high of 7%, after Suez Canal blockage

The rates are expected to reach even greater heights in the near term.

Container spot freight rates rebounded 7% week-on-week to 98% of their all-time high, driven by the Suez Canal blockage, Jefferies has reported.

The impact of the disruption, however, has not fully taken effect yet. This will likely bring up spot rates to new highs in the second quarter of the year. The w-o-w rebound rates we linked to the Asia-to-Europe and Asia-to-US west coast routes.

“With the full effect still to come (port congestion, and vessel capacity and box shortage), spot rates could reach new highs in the near term and Q2 earnings could exceed already record Q1 earnings,” the report read in part.

Supply bottlenecks are still expected to worsen given the additional 7-14-day to the voyage. This will also affect other routes other than Asia-Europe and Asia-US east coast.

Moreover, Jefferies projected a record annual profit this year as it sees earnings in the second quarter will likely beat Q1 performance.

“We raise our earnings and expect record annual profit this year.”

In the first quarter, Hong Kong-listed Cosco Shipping’s net profit amounted $18.38b, which is already a quarterly record.

This could be higher in the succeeding quarter “as the strong rates will be reflected in 2Q given revenue is recognised progressively through the journey,” the report noted.

It added the industry will benefit in the second half of the year from higher transpacific contracts, starting in May, with transpacific spot rates of 140% higher year-on-year.

“We expect newbuilding orders to continue to increase despite 138 new orders in 1Q21, which already exceeds 2020 full year orders,” Jefferies said.

Join Hong Kong Business community
Since you're here...

...there are many ways you can work with us to advertise your company and connect to your customers. Our team can help you dight and create an advertising campaign, in print and digital, on this website and in print magazine.

We can also organize a real life or digital event for you and find thought leader speakers as well as industry leaders, who could be your potential partners, to join the event. We also run some awards programmes which give you an opportunity to be recognized for your achievements during the year and you can join this as a participant or a sponsor.

Let us help you drive your business forward with a good partnership!

Top News

Unemployment rate rises to 5.4% from February to April
The total number of unemployed people stands at 206,100.   The unemployment rate rose by 0.4 percentage points to 5.4%  from February to April, when compared to the January to March period.    Based on the data from the Census & Statistics Department (C&SD), the total number of unemployed people from February to April was 206,100, an increase of 17,600 from the preceding three-month period.   Meanwhile, the number of unemployed rose by around 25,000 to 142,000, translating to a rate of 3.8%.   With the increase in the number of jobless and underemployed individuals, total employment dropped to 3,559,200, whilst the labour force fell to 3,765,300.   The deterioration of Hong Kong’s labour market however should see an improvement in the coming months, according to Secretary for Labour & Welfare, Dr Law Chi-kwong.   The receding local epidemic situation and progressive relaxation of social distancing measures, the new round of Consumption Voucher Scheme, and Other relief measures including the 2022 Employment Support Scheme should help drive improvement in the employment sentiment, said the C&SD.