Shippers are being asked to pay in excess of $10,000 to ship a 40-foot container from Asia to Europe, according to Xeneta chief executive Patrik Berglund.

The worst-hit trade from China to the UK has seen rates “explode” due to port congestion and surging volumes.

Rates from Shanghai to the UK averaged around $9,200 per 40-foot equivalent unit (feu), up from $3,300 per feu at the end of November.

At the top end of the market, some Asian exporters paid as much as $11,888 per feu, said Berglund, who is co-founder of the Oslo-based freight rate benchmarking site.

Smaller shippers exposed to the spot market are among the hardest hit — some are being forced to pay surcharges of up to $1,000 per container.

“The big-volume players will usually have a long-term contract,” Berglund said.

But he added that the huge increase in volumes being shipped has enabled lines to slap on expensive surcharges.

That has moved the long-term freight market higher and brought it closer to the spot market.

“It is a seller's market,” he said. “There’s too many companies fighting to get too little space and equipment.

“Since we’ve started this business, we’ve never seen anything remotely close to a seller's market like this.”

Rises of 2,000%

Rates from Asia to Europe have surged by 2,000% since March 2016, when the average shipping price for a container was $400 per feu. Some were shipped for as little as $150 per feu, according to Berglund.

That proved unsustainable and led to the bankruptcy of Hanjin Shipping in August 2016.

“At that point, it was a buyer’s market,” he said. “We are seeing the same thing now — but in complete reverse.”

The rising cost of freight has led European shippers to raise their concerns with competition authorities in Brussels.

In a joint letter to the European Commission in early January, the European Shippers Council and the European Freight Forwarders Association complained about the practices of liner operators.

“Carriers have been reserving for themselves the ability to change rates whenever they see fit, notwithstanding the specific rates and charges agreed,” the shippers said.

The lines were “unilaterally setting rates far in excess of those agreed in contracts” and had violated existing contracts and set unreasonable conditions for the acceptance of bookings, the organisations claimed.

Liner operators rejected any suggestion that the rate rise can be attributed to their actions.

“Calling for regulation in such an abnormal situation will not solve our current issues," said the World Shipping Council (WSC).

Xeneta chief executive Patrik Berglund says there has never been a seller's market like this one. Photo: PR Web

Shippers claim that a shortage of containers is partly attributable to an unprecedented number of blank sailings, up to 30% on some trades.

But the rate spike has not been manufactured through the “nefarious use of blank sailings”, Danish analyst Sea-Intelligence argued.

It said the number of blank sailings increased in late 2020 and early 2021. However, capacity has increased on major east-west trades due to the use of extra loaders and larger vessels.

Levelling off

“Mid-January normally marks the beginning of capacity reductions in anticipation of the Chinese Lunar New Year holidays, when factories in Asia close,” the WSC said.

“But that is not the case this year, indicating that carriers will make best possible use of this time to clear volumes out of Asia.”

Freight rates are levelling off on trades out of Asia, but port congestion remains a big problem, according to freight data portal Freightos.

Record volumes arriving at the ports of Los Angeles and Long Beach have kept more than 30 container vessels at a time anchored in San Pedro Bay awaiting a berth, it said.

“Many will wait for more than a week, further delaying the return of empty equipment,” wrote Judah Levine, research lead at Freightos.

That had led to more than one in three containers being rolled from their scheduled sailing in December, and to carriers skipping port calls, stopping bookings and cancelling services to catch up with their schedules.

“With essentially all available capacity already active, industry observers agree that the situation is unlikely to improve until demand decreases, which may only happen once the pandemic is firmly under control,” Levine said.

This story has been amended since publication to reflect that rates