Freight costs, which contribute towards the total cost of a solar installation, have increased week-on-week on trade lines out of the Far East following military strikes in the Middle East, according to analysis published by Xeneta.
The Norway-headquartered company’s latest update says the conflict in the Middle East highlights how quickly a regional crisis can ripple across supply chains and escalate freight rates.
The market average spot rate from the Far East to U.S. West Coast was $2,123 per forty-foot equivalent unit (FEU) yesterday (March 5), compared to $1,883 per FEU on February 26. On the Far East to U.S. East Coast route, the average spot rate stood at $2,870 per FEU yesterday, compared to $2,659 per FEU the week prior.
Similar increases were recorded on the Far East to Mediterranean route, which went from $3,335 per FEU last week to €3,570 per FEU yesterday and on the Far East to North Europe route, which went from $2,224 per FEU on February 26 to $2,338 per FEU on March 5.
In contrast, market average spot rates on the North Europe to US East Coast route remained relatively stable, standing at $1,451 per FEU yesterday, compared to $1,487 per FEU the week prior.
Additional data from Xeneta has found 147 container ships that are currently sheltering in the Arabian Gulf and unable to leave due to the risk of sailing through an active conflict zone.
Xeneta Chief Analyst, Peter Sand, commented that global supply chains continue even through the most severe crisis, with more ships on the water currently sailing toward the gulf.
“The question is what ports they will be diverted to and where containers will be offloaded,” he explained. “Alternative ports are not equipped to deal with a sudden increase in volumes arriving against chaotic schedules, so severe congestion is expected.”
Sand added that while the most significant increases in freight rates are found on trades closest to the epicenter of the conflict, early Xeneta data shows that ripple effects are starting to be seen well away from the conflict zone with average spot rates from China to the UK increasing 9% compared to February 26.
According to analysis from price reporting agency OPIS, the military action has so far had limited direct impact on Chinese solar module and cell trading but has already had an impact on container shipping, which is the primary transport for solar products in the region.
The analyst’s latest update for pv magazine says that with several shipping lines to the Middle East already suspended, near-term logistical disruptions could delay raw material deliveries and contribute to price volatility.
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