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Ten consecutive increases in freight rates! Northern Europe breaks through the 20,000 US dollar mark, and the trans-Pacific to the west is quoted as high as 25,000 US dollars! When will it end?

AUTHOR: TIME:2023-03-16 14:05:35CLICK:67

In recent months, the shipping industry and the global supply chain have faced tremendous challenges. The chaos of the new crown pneumonia epidemic and the unforeseen black swan incident have made container stagnation, ship jumping, poor transportation turnover, and port congestion the norm. .

The deadlock in the transportation market's tight capacity has not yet eased, and the global freight market's freight rates are becoming more and more crazy. For example, the "rocket-style" topping continues to break through the original record, without end...

The short-term freight from China to Northern Europe has exceeded the US$20,000/FEU mark, while the trans-Pacific shipping company to the west coast of the United States has quoted as high as US$25,000. It was reported last week that the offer from Shanghai to Los Angeles reached 32,000 US dollars.

European freight rates have recorded a tenth consecutive increase!

According to relevant foreign data, in July, the top 5 shipping companies offered a price of USD 21,000 per 40 feet for cargo from Chinese ports to Felixstowe and Southampton. The average price is around US$18,000.

The two major freight indices of Shanghai Shipping Exchange and Baltic Sea show that freight rates from Shanghai, China to Europe have risen continuously in the past 10 weeks! Among them, in the 23rd week, the spot freight of containers to Europe increased by 7.9%, which was the 10th consecutive week of month-on-month increase; while the freight rate to the Mediterranean increased by 5.4%, which was an increase from the previous week for 11 consecutive weeks.

The latest issue of the Freightos Baltic Index (Freightos Baltic Index) launched by the Baltic Shipping Exchange and Freightos shows that the Nordic Freight Index is US$10,979 per 40 feet, and the Mediterranean Freight Index is US$11,098.


Asia-Northern Europe Mediterranean Cargo Index

A UK-based NVOCC said that a "short e-mail" from the carrier to raise prices again was like the "last straw" that overwhelmed them. "The crazy shipping costs have caused many orders from China to be cancelled, which has had a serious impact on retailers who are unable to raise retail prices."

Andy Cliff of Straightforward Consultancy, a Warrington-based logistics and supply chain consulting firm, warned that some importers are caught in the trap between fixed prices and high freight rates agreed with major retailers and may run into trouble.

"Many British importers will find themselves in trouble, with freight rates eight times higher than last year; therefore, bankruptcy is expected in 2022," he warned.

Although these substantially increased rates include additional fees to secure containers and space, some shippers complain that their cargo is still being dumped.

As the peak season approaches, the situation for shippers heading to Europe and the United States seems to get worse. They will need to be prepared for a new round of FAK and GRI price increases starting from July 1, and they will also face another fee increase starting in mid-July, as well as thousands of dollars in PSS (peak season surcharge).

Trans-Pacific offers up to US$25,000

In the Trans-Pacific region, the FBX index on the west coast of the United States is $6,905, and the FBX index on the east coast of the United States is $9,891.

Craig Grossgart, senior vice president of global shipping of Seko Logistics, confirmed that a shipper last week offered a price of US$32,000 for a 40-foot container from Shanghai to Los Angeles. "To be honest, I think this is a "polite way" for carriers to express to customers that they don't want to accept their business." Grossgart said.

Nonetheless, he stated that he has offered an offer of US$25,000 per 40 feet to a shipper who needs to ship 300 containers from Shanghai and Yantian to Los Angeles next month-"This is a serious offer."

With the increase in premiums, coupled with a large number of other expenses, the gap between the spot market index and the actual payment rate is widening week by week.


Asia-US East US West Freight Index

The World Container Index released by Drewry on the 24th marked the biggest increase since its establishment in 2012. A further increase of 15.9%, reaching $8061.65/FEU, an increase of $1,104, an increase of 332% over the same period in 2020.

At the same time, last Friday's latest Shanghai Container Freight Index (SCFI) rose another 37 points, reaching a new high of 3785.40 points, an increase of 1.0% from the previous period.

In the first half of the year, unforeseen events such as the congestion of the Suez Canal and multiple ports in southern China have pushed up ocean freight rates as a whole.

With the gradual recovery of production and life in European and American countries, the demand for various materials has increased, and the second half of the year is the traditional peak season for shipping, including the Western Halloween, Black Friday shopping festival, Christmas and other goods will be shipped from August to December. Coupled with multiple adverse factors such as difficult booking, serious port congestion, and unstable shipping schedules, the shipping market freight rate will remain high.