Container freight rates continue to rise amid forecasts of another year of record-breaking profits for liner operators.
Rates from Asia to the US East Coast rose $114 to $6,226 per 40-ft container (feu) on 15 April, putting them nearly 10% higher than at the time of the Suez blockage, according to the Freightos Baltic Index.
The index registered a 53% spike in rates on the trade from North Europe to the US over the past two weeks to a multi-year high of $3,357 per feu.
The rises are triggered by congestion which is affecting empty container availability in Europe and carriers cancelling sailings, possibly to move capacity to the directly impacted lanes, according to Freightos research lead Judah Levine.
Surging volumes led Mediterranean Shipping Co (MSC) this month to deploy the 13,102-teu MSC Cristina (built 2011) on the transpacific trade.
MSC is the first carrier to deploy a neo-panamax ships between North Europe to the US East Coast and the vessel is the largest containership to operate on the trade, Alphaliner says.
Freightos argues that the global trade is feeling the slow-moving effect of the Suez blockage on capacity and pricing.
Critical congestion at major ports such as Rotterdam and Felixstowe, and resulting delays, equipment shortages and cancelled sailings, are pushing up freight rates, it adds.
Estimates of how long the ripples from Suez will last range from the next three to six weeks, but a significant respite from delays and elevated rates in not expected before the end of the year, according to Freightos.
Another record year
The huge freight rate inflation has led to forecasts that carrier profits could be lifted to new record heights.
In 2020, the liner industry turned in a profit of $26.6bn, according to Drewry’s latest Container Forecaster.
It suggests that carriers are set to remain very profitable for at least another two years.
Port congestion and container equipment shortages will remain an unwanted feature throughout most of 2021.
This will further restrict the availability of capacity and lead to substantially higher average spot and contract freight rates.
“With higher contracts rates locked in, another highly profitable year is virtually guaranteed and Drewry thinks the industry will reset profitability records once again in 2021,” the analyst said.
Lines are expected to remain highly profitable this year and next, owing to favourable supply and demand growth trends.
However, the outlook post-2022 remains less certain, according to Drewry.
The analyst points to the rapid escalation in newbuilding orders with contracts signed this year already far in excess of the 2020 full-year tally, with a “staggering” 1.45m teu booked in just three months.
“These ships are being ordered as if they are for today, not what the market will look like when they are ready for delivery in two to three years," Drewry said.
"Owners are risking paying top dollar for assets that will potentially end the container upcycle.”
