Container freight rates are burning new highs! The trans-Pacific increased by 228%, the trans-Atlantic increased by 132%, and the Asia-Europe route

 increased wildly!

When freight rates soared in August and September last year, people in the industry were already shouting: "Freight rates are becoming crazy", "records are broken"... Today's freight rates have repeatedly broken the original records, and they are still Soaring.

Judah Levin, head of research at Freightos, a digital container freight platform, said: “The uninterrupted demand for ocean freight and the resulting delays and container shortages have caused the spot prices on all major trade routes to hit a new high this week.”

However, the spot freight rate does not explain all the problems. In addition to these costs, the shipper has to pay thousands of dollars in additional costs to load the goods on the ship.
In addition, the annual freight contract price is 50%-100% higher than last year, which will protect importers and exporters from the latest increase in spot freight rates to a certain extent. However, as the traditional peak season approaches, many cargo owners are still largely constrained by the spot market. Therefore, where possible, high transportation costs will be passed on to consumers in the form of inflation.
forwarder agent in china

▍Trans-Pacific freight rates are still rising

As of Wednesday, the Freightos Baltic Daily Index launched by the Baltic Shipping Exchange and Freightos showed that the spot freight rate for the Asia-West Coast route was US$5,650/FEU. This is a 15% increase from the beginning of this month and a 70% increase from the prices in August and September last year.

Today's freight rate is 3.2 times that of mid-May 2020, a year-on-year increase of 228%.

Due to the long route from Asia to the East Coast of the United States through the Panama Canal, Freightos assessed the spot freight rate on Wednesday at US$7,435/FEU, a year-on-year increase of 171%. On Tuesday, it hit an all-time high of $7,555/FEU.

If additional costs are added, paying approximately US$10,000 per FEU seems to be the new normal for Asia-East Coast freight.
 Container freight rates are burning new highs! The trans-Pacific increased by 228%, the trans-Atlantic increased by 132%, and the Asia-Europe route increased wildly!
forwarder agent in china

In addition, the weekly World Container Index released by Drewry on Thursday estimated that the Shanghai-Los Angeles container freight price was US$5,255/FEU, an increase of 201% over the same period of the previous year; Shanghai-New York containers The freight rate was US$7,085/FEU, an increase of 154% over the same period last year.

▍Transatlantic freight rates are also setting a record this week
The triple challenges of soaring demand, port congestion and shortage of containers have led to a sharp increase in container freight rates on transatlantic trade routes in the past few weeks.

Usually, this route has been relatively stable in terms of cargo volume and freight. According to the Baltic Sea Freight Index, the freight rate for the westbound voyage from Northern Europe to the East Coast of the United States has been hovering at around US$1,800/FEU.

But at the end of March, prices began to climb seriously.

On March 26, the price of FBX was US$2,174/FEU, and on May 7, the price rose by 65% to US$3,596/FEU.
As of this Wednesday, Freightos has set the European-US East Coast spot freight rate at a record high of US$4,299/FEU, a year-on-year increase of 132%.
Drewry's assessment is much lower than that of Freightos, at $3,550/FEU, a year-on-year increase of 37%.
forwarder agent in china

▍The freight rate of Asia-Europe route has soared the most extreme

Many shippers operate globally and ship large quantities of goods from Asia to Europe. No matter how extreme the increase in freight rates to the United States is, they pale in comparison to the situation in Europe. Since the Ever Given accident occurred, the freight rate from Asia to Europe has risen from the originally very high level, which has seriously affected the flow of goods.

According to Frieghtos, the Asia-Northern Europe freight rate was US$8,331/FEU on Wednesday, a year-on-year increase of 493% and 5.9 times the amount in mid-May 2020. Among all the main trade routes, Asia-Northern Europe experienced the largest increase in freight rates.Container freight rates are burning new highs! The trans-Pacific increased by 228%, the trans-Atlantic increased by 132%, and the Asia-Europe route increased wildly!

Among them, the freight rate of the Asia-Mediterranean route was US$9,387/FEU, which was 4.8 times that of the same period last year and increased 377% from the same period last year.
forwarder agent in china

Drewry estimates that the current Shanghai-Rotterdam freight rate is US$8,976/FEU, a year-on-year increase of 539%, and the Shanghai-Genoa freight rate is US$8,943/FEU, a year-on-year increase of 471%.

▍In the short term or maintain a high position
The Shanghai Shipping Exchange released the analysis of the "Analysis Report on China's Export Container Transport Market in April 2021" on May 7. In April, due to the continuous disturbance of shipping schedules and the lack of containers, the impact of the Suez Canal blockage at the end of last month began to appear. , China’s export container shipping market continues to be under-supply of capacity.

As the demand for unavailable shipments continues to accumulate and superimposed on new demand, the expansion of the capacity gap has led to the formation of a strong seller's market pattern on multiple routes.

According to the report, the continued tightness of capacity in the transportation market has resulted in the market’s high demand for leasing capacity, and the rental levels of most ship types have maintained a continuous upward trend since July of last year. However, the data also shows that the current fluctuation levels of the freight rates of major routes around the world are different. Affected by the blockage of the Suez Canal on European routes, the market's shipping schedule disorder and shortage of empty containers have further deteriorated.

Qiao Wei said that it is conservatively estimated that the tight capacity will continue until the end of this year, and it may not turn around until the end of April next year.

Qiao Wei believes that the tightness of the global shipping market will not be eased before large capacity is added to the market. Because the overseas epidemic has not yet been controlled, the ports of the United States, Europe and other countries and regions continue to have employees infected with the new crown pneumonia, resulting in labor shortages, reducing the efficiency of ports, warehouses, storage yards, inland transportation, etc. The efficiency of logistics such as cards and warehousing has dropped significantly.


forwarder agent in china
Maersk, the global leader in the container transportation industry, recently predicted that the shortage of capacity and the peak season of the industry, supported by high demand, the high freight rate may continue into the third quarter of this year.

The latest forecast by analysts from Japan’s Okazaki Securities said that if the shortage of containers and ship detention cannot be resolved, the rare high freight rate at this stage will continue at least until June.

The latest container forecast report of Drewry, a global shipping consulting company, shows that shipping companies "can achieve profitability in at least the next two years until 2023." The company stated that the growth of operators’ quarterly operating profits has increased exponentially, increasing every three months. Doubled.
forwarder agent in china

As for the follow-up market of India-Pakistan routes, many practitioners also said that based on the current shipment volume and other multi-factor analysis, it is expected that the prices of India-Pakistan routes will remain high in the short term, and there is no price turning point for the time being.

At present, the price of Southeast Asia routes is the most stable, and the prices of European and American routes have also increased this month compared with the previous month. However, on May 8th, we received notices from some shipping companies that they will increase the prices of some routes in the middle and late ten days. If the prices of Southeast Asian routes are indeed increasing by that time, there is a high probability that the prices of other routes will also increase.

In summary, the upward trend in international shipping prices cannot be eliminated in the short term, and high ocean freight rates will continue.
forwarder agent in china