European and Atlantic container ship fares rebound due to the Suez Canal Accident

Input 2021.03.26 17:50

With global average freight rates for container ships falling, only European and Atlantic routes rebounded. The Suez Canal, which connects Europe and Asia, was blocked by a ship aground accident. If the accident is prolonged, there is also a prospect that fares for other routes may increase due to a’chain effect’.

According to the shipping industry on the 26th, the’Shanghai Container Ship Freight Index (SCFI)’, a global container ship freight index, recorded 2570.68, down 13.19 points from last week. The decline was the smallest in five weeks. SCFI is calculated on the basis of spot (spot, irregular short-term transportation contract) fares for 15 routes by the Shanghai Shipping Exchange in China, and fares for routes passing through the Suez Canal have been strong.

Fares for Asia-Europe routes were $3742 per TEU (one 20ft container), up $77 from last week. Fares, which had declined for four consecutive weeks since the 26th of last month, have recovered to the $3700 level again. Fares for routes between Asia and North America also increased by $44 in a week, to $4839 per FEU (one 40-foot container). It returned to the $4800 level in two weeks.

Asia-Mediterranean routes and Middle East routes fell by US$1 and US$18 per TEU, respectively. However, compared to the drop down to $100 per share this month, the drop has significantly decreased.

It is interpreted as the effect of the suspension of traffic on the Suez Canal. The Suez Canal has been blocked for the third day after the’ever given’, operated by Taiwanese shipbuilder Evergreen, went aground on the morning of the 23rd. There are only 49 ships that have entered the Suez Canal and cannot even get to the road. More than 100 ships, including those waiting in the Mediterranean Sea and the Red Sea, have been hindered from operating. HMM(011200)GDANSK, a 24,000 TEU-class super-large container ship, has also been waiting for a second day near the Suez Canal.

The key is when this accident is resolved. The Suez Canal is paying attention from the 28th to the 29th, when the tide is high. Even at this time, if the Evergiven cannot be lifted, the fuel may have to be drained and lowered to the container to reduce the weight of the ship. In this case, it will take several weeks to normalize.

If the case is prolonged, the ships will have no choice but to bypass the Cape of Good Hope in the southern tip of Africa. It takes at least a week longer than passing through the Suez Canal. This means that the flight schedule is twisted. An official from the shipping industry said, “The longer it takes to take a route, the less the amount of cargo that can be digested will decrease.”