Widening spreads between high and low costs for shipping containers on various trade lanes indicates uncertainty on both sides of the trade, largely because of the war in the Middle East, a market analyst said.
Lars Jensen, president of consultant Vespucci Maritime, said his focus is not just on the spreads, but in the changes of the spreads over the short term.
Jensen said the spread on the Asia-North Europe trade lane widened to $600/FEU (40-foot equivalent unit) from $500/FEU; the China-USWC spread grew to $800/FEU from $750/FEU; the southeast Asia-USWC widened to $1,260/FEU from just $850/FEU; the China-USEC grew to $980/FEU from $640/FEU; and the transatlantic westbound trade lane widened to $1,100/FEU from $840/FEU.
“This development indicates a market in which the stakeholders on both the buy and sell side are increasingly uncertain as to the conditions in the current and immediate future,” Jensen said.
Jensen, speaking on the Supply Chain Secrets podcast hosted by NYSHEX (New York Shipping Exchange), said when there is that level of uncertainty, market players can end up with spot deals that are further from each other than what you would normally see.
“So, uncertainty in the market is very much the headline that we have seen over the past week,” Jensen said.
STRAIT OF HORMUZ CLOSED AGAIN
On Friday, US President Donald Trump announced in a social media post that the Strait of Hormuz is fully reopened, but Iran’s Tasnim News Agency said there were three conditions, citing an informed source.
On Saturday, Iranian news agencies announced on social media that the US did not fulfill its obligations.
“So, the Strait of Hormuz is now closed again and passage requires IRAN approval,” it said.
Jensen said this follows a morning where a minor convoy of tankers managed to exit the Persian Gulf after a brief wait overnight.
There was a brief window on 18 April when more than 20 ships carrying oil, liquefied petroleum gas (LPG) and chemicals crossed the Strait of Hormuz, the highest daily volume since 1 March, news agency Reuters said, citing data from analytics firm Kpler.
According to the Strait of Hormuz tracker, a free, real-time dashboard that tracks the ongoing crisis using AI-powered analysis of current strait conditions, insurance markets and diplomatic developments using real-time web data and AIS data for vessel positions, no vessels have transited the strait over the past 24 hours.
The closure has had less of an impact on container shipping as less than 2% of global container capacity passes through the strait each year.
However, the closure has had a much greater impact on crude oil and chemical markets as around one-third of global seaborne crude flows and up to 20% of the world’s total oil flows pass through.
Source: By Adam Yanelli, Additional reporting by Nurluqman Suratman, ICIS
