Freight costs from the Far East to the US and Europe have increased week on week, while almost 150 container ships are currently unable to leave the Arabian Gulf due to the risk of sailing through an active conflict zone, according to an analysis by Xeneta, a benchmarking platform for sea and freight rates.
Freight costs, which contribute to the overall cost of a solar installation, have risen week on week on trade lines from the Far East following military attacks in the Middle East, according to an analysis published by Xeneta.
The latest update from the Norway-based company said the conflict in the Middle East highlights how quickly a regional crisis can ripple through supply chains and escalate freight rates.
The market average spot rate from the Far East to the US West Coast was $2,123 per forty foot equivalent unit (FEU) yesterday (March 5), compared to $1,883 per FEU on February 26. On the route from the Far East to the US east coast, the average spot rate yesterday was $2,870 per FEU, compared to $2,659 per FEU the week before.
Similar increases were recorded on the Far East to Mediterranean route, which rose from $3,335 per FEU last week to €3,570 per FEU yesterday, and on the Far East to Northern Europe route, which rose from $2,224 per FEU on February 26 to $2,338 per FEU on March 5.
In contrast, market average spot rates on the route from Northern Europe to the US East Coast remained relatively stable at $1,451 per FEU yesterday, compared to $1,487 per FEU the week before.
Additional data from Xeneta revealed 147 container ships currently sheltering in the Arabian Gulf and unable to depart due to the risk of passing through an active conflict zone.
Peter Sand, chief analyst at
“The question is which ports they will be diverted to and where containers will be unloaded,” he explained. “Alternative ports are not equipped to deal with a sudden increase in volumes arriving on chaotic schedules, so severe congestion is expected.”
Sand added that while the most significant increases in freight rates are on routes closest to the epicenter of the conflict, early Xeneta data shows ripple effects far away from the conflict zone are starting to emerge, with average spot rates from China to Britain rising 9% compared to February 26.
According to an analysis by price intelligence firm OPIS, the military action has so far had a limited direct impact on China’s trade in solar modules and cells, but has already had an impact on container shipping, the main mode of transport for solar products in the region.
The analyst’s latest update for pv magazine says that with several shipping lines to the Middle East already suspended, short-term logistics disruptions could delay raw material deliveries and contribute to price volatility.
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