The month of June began with a bang, especially on the Asia-Europe corridor. The traditional high season seemed to arrive earlier than expected, while shipping companies adjusted capacity by practicing aggressive blank sailings. A situation that was particularly reminiscent of the post-lockdown period of the Covid pandemic.
As logic dictates, spot freight rates have risen sharply, and in the contract market, the most urgent freight has found itself under pressure. Customers had to accept much higher rates in order to load their shipments. However, by the end of the month, the overheating began to subside. Admittedly, freight rates remain high compared to the end of 2023, but there is a plateau. In reality, the fundamentals of the recovery in European demand are not solid. The overheating seems more related to a panic movement skilfully managed by the companies than to a real economic recovery. As the crisis continues in the Red Sea, shippers are beginning to fear difficulties in accessing capacity and have therefore anticipated the delivery of goods.
One factor accentuated the trend: the threat posed by the Houthis in the Red Sea was reactivated in June, after showing some signs of weakening the previous month. A sailor was killed in the attack on the MV Tutor, a Greek bulk carrier loaded with grain for India from Russia, which eventually sank.
This terrorist act, largely scripted by the Houthis, reminds us that the Red Sea is now a naval war zone. The question of the Houthi threat is absolutely central, because it is today the only objective factor affecting the rise of freight rates.
A majority of experts agree that the current situation is set to continue. Personally, however, I believe that this ban on passage through the Red Sea for most ships, finally tolerated for several months by the major economic powers, is becoming increasingly unacceptable. The G7 Heads of State and Government, meeting from 13 to 15 June in Italy, “condemned the persistent attacks” and “reaffirmed the right of countries to defend their ships, in accordance with Security Council Resolution 2722 and international law”. The Houthis, however, retain considerable leverage since they still hold the Galaxy Leader and its crew.
On the Asia-Europe corridor, spot rates have inevitably skyrocketed, given the context we have just described. But most of the volumes under contract continued to pass through the Cape of Good Hope in a tariff range between (...)