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European shipping rates are inverted! The outcome of Russia-Ukraine negotiations becomes crucial!

According to information obtained by E-Shipping: Due to the sluggish European economy and the new shipping alliances slashing prices to compete for cargo, the freight rates for European routes have plummeted, with the spot price falling below the contract price this week, a phenomenon known as "inversion." In response to this situation, major shipping companies are planning to increase freight rates in March, demonstrating their determination to stabilize prices.

Industry insiders believe that if Russia and Ukraine can reach a ceasefire agreement, the post-war reconstruction will increase the demand for freight, which is good news for the freight rates of European and Mediterranean routes. However, the prerequisite is that the later the Red Sea crisis is resolved, the better. In the long run, the end of the war will help reduce energy costs, mitigate inflation, improve the economy and purchasing power of the eurozone, and thereby increase freight volume.

It is reported that the freight rate for European routes this week is about $2,500 per 40-foot container. Market sources indicate that the contract price for European routes signed this year is about $2,500 to $3,200, depending on the volume of shipments from the shippers. Due to the many variables in the market, the proportion of long-term contract prices for European routes signed this year is low, with many shippers opting for quarterly or semi-annual contracts to adapt.

A freight forwarder received quotes from major shipping companies for European routes in March on the 19th. Maersk has announced a price increase to $4,000 starting March 3, Mediterranean Shipping Company (MSC) has announced a price increase to $4,340 in the first half of March, Ocean Network Express (ONE) has announced a price increase to $4,016 in the first half of March, and Hapag-Lloyd has announced a price increase to $4,100 for the entire month of March. It is understood that customers with large volumes of cargo can obtain lower freight rates.

Simple: 02-21 09:57:02 Former Chairman of Yang Ming Marine Transport Corp., Mr. Hsieh Huey-chuan, along with other industry insiders, have indicated that over the past year, the European shipping routes have seen a significant amount of cargo being imported in advance due to the Red Sea crisis and tariff issues, resulting in a relative decrease in cargo volume this year. Should the Russia-Ukraine war come to an end and reconstruction efforts begin in both regions, leading to an increase in cargo volume, it would be beneficial for both the European and Mediterranean shipping routes. In the long term, the end of the war would help the European Union to lower energy costs, mitigate inflation, improve the economic situation and purchasing power within the Eurozone, and consequently increase cargo volume. Additionally, it has been reported that the United States and Russia have reached a consensus to each form negotiation teams to seek a lasting and mutually acceptable solution to end the Russia-Ukraine war as soon as possible. In this regard, several shipping companies and freight forwarders have speculated that the United States, eager to secure 50% of Ukraine's rare earth minerals, will make every effort to facilitate a ceasefire agreement between Russia and Ukraine. However, another variable for the European shipping routes is the Red Sea crisis. With the second phase of ceasefire negotiations in Gaza set to commence this week between Israel and Hamas, if the Red Sea can resume navigation in the second or third quarter of this year, releasing over 10% of the excess shipping capacity, it will impact freight rates, and the shipping industry will be on edge.