The Red Sea crisis continues to drive the container market as the number of ships diverted to the Cape route hit a fresh high with no signs of abating. This will continue to create a capacity shortage across all routes, with the Cape diversions and incremental capacity needed to connect to Red Sea and Med ports already soaking up more than 7% of the global containership fleet. Freight rates retained most of the January gains, with the SCFI shedding only 5.8% of its pre-Chinese New Year peak while capacity utilisation remain relatively resilient over the post holiday slack period. The ship shortage has already driven up charter rates by 30% since the end of December with new vessel deliveries slowing in February due to the Chinese holidays. Overall sentiment remains positive with capacity on both the Transpacific and Asia-Europe routes expected to remain tight in March despite a bumper crop of newbuildings due next month.
Linerlytica
Number of containerships on Cape route hit record high
The number of containerships diverted from the Suez to the Cape route has rebounded to a record high of 403 units for 5.14m TEU as at 25 February 2024. The recent surge was partly due to CMA CGM’s decision to reroute from the Red Sea since 1 February 2024 even though the French carrier has backtracked since then with the 16,022 teu CMA CGM JULES VERNE making an eastbound Red Sea passage last week, with a second ship (the 14,414 teu CMA CGM T. ROOSEVELT) scheduled to follow later this week despite escalating risks on the Red Sea. Several smaller carriers have also added to the number of ships on the Cape route, notably Tailwind Shipping who has added 9 ships on its Asia-Europe service since January. The Chinese carrier OVP has also sent one of its eastbound China-Baltic Russia ships to the Cape route, marking the first Cape diversion by these niche carriers even though all of their ships heading westbound remain on the Red Sea route.
Weekly/Monthly Market Pulse: US$1,500/US$1,800 per year