Container freight rates are set to rise further because of increasing uncertainty on trade lanes to the Middle East, say analysts.

Spot rates from Asia to the Middle East Gulf were on an upward trajectory even before the seizure of the 15,000-teu MSC Aries (built 2020) by Iranian forces on Saturday.

Rates from Shanghai to Dubai rose 45% to $2,051 per teu in the month to 12 April, according to the Shanghai Containerized Freight Index.

That upward trajectory is likely to be maintained due to increased war risk premiums, leading to heightened volatility in shipping markets, according to Christian Roeloffs, chief executive of container trading portal Container xChange.

“We anticipate that freight rates may rise in response to the increased tension and uncertainty,” he said.

“Furthermore, while the possibility of diversions around the region, potentially impacting hubs like Jebel Ali [in Dubai in the United Arab Emirates], exists, we believe it’s unlikely given the hub’s importance in global shipping networks.”

Other container sources described the seizure of the MSC Aries in the Strait of Hormuz as “extremely concerning”.

“An already bad situation in the Red Sea and the Gulf of Aden has just got worse and could put ocean freight container imports and oil exports in the Middle East at risk,” said Peter Sand, chief analyst at Xeneta, a container freight rate benchmarking service.

Container imports to the Middle East are at risk, says Peter Sand, Xeneta’s chief analyst. Photo: Xeneta

He expressed concern about any widening of the conflict that has already resulted in huge disruption to ocean freight services in the Red Sea region.

“For example, Dubai is a regional hub for imports as well as sea-air corridors, with containers arriving by ocean via the Strait of Hormuz for onward travel by air to Europe and North America,” he said.

“If ships are impacted from sailing into the Arabian Gulf, then the disruption would be considerable.”

Transpacific collapse

The prospect of rising rates to the Middle East contrasts with the picture in key East-West trades, where rates are falling.

Rates from China to the US West Coast hit their lowest level since the beginning of the year, dropping $642 to $2,672 per 40-foot equivalent unit (feu) over the weekend, according to the Freightos Baltic Index (FBX).

That is down from a peak of more than $5,000 per feu nearly two months ago.

Rates have collapsed despite long diversions around Africa that have helped to soak up capacity.

That is partly due to the wave of large newbuildings being introduced in key East-West trades, including the 13,788-teu HMM Aquamarine (built 2024).

The vessel is the third of six conventionally powered and scrubber-fitted sisters being delivered to South Korean carrier HMM by Hyundai Heavy Industries.

It will be deployed on the Asia-North American West Coast service of THE Alliance.

The FBX, a basket of 12 trades, dropped $183 over the weekend to $2,332 per feu on Monday, taking global freight rates back to where they were at the beginning of the year — although these are still around twice the level they were before Christmas.

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