The project logistic business relies on a stable container shipping sector in order to balance the books. While out-of-gauge cargo certainly catches the eye, thousands of freight tons of cargo for large-scale projects moves in boxes and price volatility can wreak havoc on a project’s bottom line.

With capacity and equipment scarce and spot rates now several thousand dollars above long-term contract levels, annual agreements are becoming unreliable. A recent Freightos Group survey of more than 50 logistics professionals found that since early May, nearly 70 percent of beneficial cargo owners and forwarders with long-term ocean contracts have had containers rolled or pushed to the spot market, or are facing contract renegotiations with carriers to increase their long term rate levels. 

Freightos believes that more container price increases are expected in the coming days. Among the factors contributing to rate increases are the ocean peak season’s early arrival; Red Sea diversions straining capacity, schedules and creating congestion; and equipment shortages. “Congestion is most severe in Singapore, and the port will reactivate a closed terminal to help get to the more than 40 vessels currently waiting as many as seven days for a berth,” said the analyst. 

Promisingly, 40 percent of respondents believe that the situation will improve within the next two months when peak demand may ease. 26 percent expect disruptions to last into Q4, and others think it could stretch even longer. 

The volatility has been beneficial for the balance sheets of container shipping lines. Maersk, for example, has increased its full-year guidance for 2024. On the back of continued strong container market demand and the disruption caused by the Red Sea crisis, the carrier said that further port congestions, especially in Asia and the Middle East, and additional increase in container freight rates, should contribute to stronger financial performance in the second half of this year. 

Based on these developments, Maersk expects underlying EBITDA of USD7-9 billion for the full year 2024 (previously USD4-6 billion). It also forecasts EBIT to eventually total USD1-3 billion, (as opposed USD -2 to 0 billion). “Trading conditions remain subject to higher than normal volatility given the unpredictability of the Red Sea situation and the lack of clarity of future supply and demand,” said the company.