Live Markets: Keep an eye on freight rates

SITC International Holdings

03/06/2024 13:41

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    KEEP AN EYE ON FREIGHT RATES
    The cost of shipping goods from Asia is ticking higher, a
headache for many companies, and one that is unlikely to ease
any time soon, says HSBC.
    The Shanghai Containerised Freight Index - an important rate
indicator for sea freight from Asia - is at post pandemic peaks,
at its highest since August 2022, and up 76% since just the end
of March.  SCF-IDX-SSE 
    HSBC says there are several demand and supply factors behind
the move.    
    * Concerns over US tariff increases for China are driving a
front
loading of shipments.
    * Rising freight rates and potentially longer lead times
from
prolonged Red Sea disruptions and a looming strike at US Gulf
and US East Coast ports are also driving cargo owners to ship
early.
    * The end of destocking in the US has meant that retailers
now
need to rely on imports rather than inventories to meet demand. 
    * Rising port congestion and equipment shortages are driving
supply scarcity.

    The rising prices can't be good for most companies
manufacturing in east Asia and selling in Europe or North
America. On the other hand, HSBC has 'buy ratings on Maesk
 MAERSKb.CO  and Hong Kong listed SITC  1308.HK , given the
freight rate momentum.  
    
    (Alun John)
    *****    
    
    
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