Freight rates have skyrocketed again in the first half 2024 due to rerouted vessels, port congestion and higher operational costs. By mid-2024, the Shanghai Containerized Freight Index (SCFI) had more than doubled compared to late 2023. Since then, it has dropped 45% from its 2024 high. However, the SCFI remained more than double its 2023 average.

The UN notes that disruptions in key routes through the Red Sea (Houthi attacks), Suez Canal and Panama Canal (low water levels) have significantly increased freight rate volatility. Factors like increased shipping distances, heightened fuel consumption, a push for renewable fuels and rising insurance premiums have all contributed to a “perfect storm” of cost pressures. Further disruptions or spikes in demand could increase freight rates, underlining the need for effective supply chain management.

It remains to be seen if rising freight rates represent more than just a temporary cost hike. They might signal deeper structural vulnerabilities in global supply chains, such as susceptivity to heightening geopolitical tensions and climate change risks.