Analysis of Rising Shipping Rates

Shipping rates have been rising continuously in recent times, mainly due to the following reasons:

1. Escalation of Geopolitical Conflicts
   The Red Sea crisis has forced many shipping companies to reroute around the Cape of Good Hope, extending the voyage by approximately 3,600 nautical miles and significantly increasing transportation costs. Major shipping giants like Maersk have announced the imposition of hefty surcharges on multiple routes.
2. Increased Pricing Power of Shipping Alliances
   Currently, the three major shipping alliances (2M, THE, and OCEAN) account for 82.4% of global shipping capacity, leading to a higher market concentration and increasing their influence on freight rates.
3. Resurgence in Demand from Emerging Markets
   Economic recovery in emerging markets like South America has boosted import demand, driving freight rate hikes for three consecutive weeks on the Far East-South America routes.
4. Limited Supply-side Expansion
   Although the shipping industry’s supply side has increased, factors such as longer vessel delivery cycles have limited the pace of supply expansion, making it difficult to meet the growing demand.

Impact of Rising Freight Rates

1. Increased Costs for Foreign Trade
   Rising shipping rates will directly increase the transportation costs for exported goods, impacting company profits.
2. Heightened Inflationary Pressure
   Higher freight rates will push up the prices of imported goods, exacerbating inflationary pressures.
3. Improved Profitability for Shipping Companies
   The rise in freight rates is beneficial for improving the profitability of shipping companies, and stock prices in the shipping sector are likely to continue rising.

In summary, multiple factors such as geopolitical conflicts, the increased pricing power of shipping alliances, resurgent demand from emerging markets, and limited supply-side expansion have collectively driven the recent surge in shipping rates. The rise in freight rates will impact foreign trade costs and inflation levels but will be advantageous for the profitability of shipping companies.