Container freight rates continued to soar this week amid warnings they may soon exceed the stratospheric levels seen during the pandemic.
The Shanghai Containerized Freight Index rose $194 to $3,379 per teu in the week ending 14 June — effectively doubling since the end of March.
Similarly, the Freightos Baltic Global Index (FBX) hit $4,128 per 40-foot equivalent unit, a rise of 70% since the end of April and three times higher than before Christmas.
The speed of the rise matches that in the pandemic, according to container shipping analyst Lars Jensen of Vespucci Maritime.
He cites anecdotal evidence that individual carrier requests have exceeded $10,000 per feu.
“We are now seeing some of the exact same dynamics play out as during the pandemic,” Jensen notes in the FBX monthly review.
The lesson learned from the pandemic was in “essence, there is no limit as to how high the rates can go”, said Jensen.
Carriers also learned that it is possible to increase spot rates much faster than ever thought before, he noted.
“If the current crisis continues — and it will, unless demand abates and Asian port congestion is fixed, or the Red Sea crisis is resolved — then it is entirely possible that spot rates will not only be able to match the pandemic records, but we might even see them exceeded,” Jensen argues.
Demand push
Growing port congestion has added to a cocktail of factors pushing up rates, notes Judah Levine, head of research of freight booking portal Freightos.
These include the prospect of extended Red Sea delays later in the year, and a rush to pull forward goods from China before new tariffs take effect.
Another factor is the early start to peak season and signs of economic recovery in Europe and North America.
Prices from Asia to the US West Coast are approaching $6,000 per feu and exceeding $7,500 to the US East Coast.
Rates for each lane are about $1,000 higher than their peaks earlier in the year, when the lead-up to the Lunar New Year coincided with the start of the Red Sea crisis, Levine notes.
Rates from Asia to the Mediterranean are back to their peak in the first quarter at about $7,000 per feu.
Prices from Asia to North Europe are some $500 above their January mark at more than $6,000 per feu.
Levine notes that further significant increases are likely for Europe on the transpacific as carriers announce peak season surcharge increases.
These amount to as much as $2,000 per feu for mid-June and the start of July.
Three more months
The tight container market is expected to last for at least three more months, says analyst Linerlytica.
Cargo volumes are likely to rise by a further 5% to 10% due to seasonal demand that historically peaks in August.
“The strong cargo volumes this year have caught the market by surprise,” Linerlytica notes
“But the peak season cargo surge could bring further pain to the market already overstretched by a shortage of vessel capacity and box equipment.”
Additional rate increases set for June show carriers do not expect demand to ease or conditions to improve in the short term.
“Shippers could face several months of very elevated rates and longer delays until peak season pressure ends,” Levine said.
“At that point, rates should ease but remain at least as high as their Red Sea-adjusted floors seen in March and April.”
