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Freight costs, which represent about 4% of the total costs of a solar module, are increasing on trade lines between the Far East and the US west coast, northern Europe and the Mediterranean region. Spot rates for container shipping have risen to their highest level since 2022, according to data from Xeneta, a Norwegian ocean and freight rates benchmark platform. In late May, Xeneta said market average spot rates from the Far East to the West Coast of the United States would reach $5.170 per forty-foot equivalent unit (FEU; 1 foot = 0.3048 meters) on June. The figure is 57% higher than in May and the highest spot freight rates have reached in 640 days, surpassing the maximum recorded during the Red Sea crisis earlier this year. Spot freight rates are expected to peak at $6,250/FEU on the Far East-US West Coast line in June, just below the Red Sea crisis high ($6,260). On the line from the Far East to Northern Europe, spot freight rates will exceed the maximum of the Red Sea crisis, reaching $5,280/FEU, compared to $4,839/FEU on January 16. It will be the highest fare on this line in 596 days and a 63% increase since April 29. Xeneta observed a similar story on the Far East-Mediterranean trade line, where spot freight rates are expected to surpass the Red Sea crisis peak of $5,985/FEU to reach $6,175/FEU. This would represent an increase of 46% compared to May and the highest rates on the route in 610 days. With freight costs accounting for around 4% of the total costs of a solar panel, rising spot rates are likely to impact PV module prices. According to Xeneta, the market has been affected by the current conflict in the Red Sea, port congestion and the decision by shippers to bring forward imports before the third quarter, which is the traditional peak season. Despite the latest increases in spot freight rates, Xeneta chief analyst Peter Sand said growth is not as rapid as during May, “which may hint at a slight easing of the situation.” “This cant come soon enough for shippers who are already having their cargo roll on, even for containers moving on long-term contracts signed just a matter of weeks ago,” Sand said. “Carriers will prioritize shippers who pay the highest rates. That means cargo belonging to shippers paying lower rates on long-term contracts is at risk of being left at the port. “It happened during the Covid-19 pandemic and it is happening again now.” Sand says freight forwarders face additional surcharges and are pushed to opt for premium services to secure space on ships. “In these cases they have no other option than to pass these costs directly on to their shipper clients,” he stated. “Carriers will continue to push for ever-higher freight rates, so the situation may get worse for shippers before it gets better.” |
