The seemingly inexorable rise of container freight rates could see the liner industry net a $100bn profit this year.
Shippers are braced for "extreme freight rates" of up to $20,000 per 40-foot equivalent unit (feu) in the coming weeks with the onset of peak season.
Soaring freight cost
Rates are close to reaching these highs — around 10 times higher than the historical average — on key east-west routes on the transpacific and Asia-Europe trades.
Rates between Asia and the US east coast rose to $10,218 per feu last Friday, nearly three times higher than a year ago, according to the Freightos Baltic Index.
But shippers are often paying thousands more in premiums to make a booking, according to freight booking platform Freightos.
The company said US forwarder Freight Right Global Logistics moved 90% of its cargo at premium rates.
The forwarder indicated that freight rates from Asia to the US east coast will likely reach $18,000 to $20,000 per feu in the coming days.
That is ahead of the pending peak season for shipments in time for Christmas, which suggests the worst may be yet to come for shippers.
Cargo crunches saw rates on the Asia-Europe trade rise to a record high of $11,858 per day late last week.
A UK shipper said there are anecdotal reports that prices for a container from China to Southampton are as high as $15,000 per feu, with talk of $17,000 per day being quoted.
Shippers had bet on a drop in spot prices from historically high levels in January, he said.
But they have been shocked to see rates rise even higher on the back of the ongoing container shortage and a series of Black Swan-like events, such as the blockage of the Suez Canal and congestion at ports in southern China.
Congestion at the Port of Yantian has been easing since the end of June with operations resuming at all of its 20 berths after the port was slowed by Covid-19 measures, according to port operator Hutchison Ports.
“All major shipping lines have resumed their vessel calls at Yantian and, more importantly, the port has welcomed a number of new services,” the company said.
Shipping lines had resumed 20 services last month and another three will resume in July, Hutchison added.
However, when one port is impacted “it can become a downward spiral for neighbouring ports”, warned Danish operator AP Moller-Maersk.
Ahmed Bashir, head of Maersk’s global execution centre, said: “We’ve been in the process of repatriating services and expect that to be complete in the next two to three weeks.”
Container spot rates have jumped by 70% over three months, according to Drewry.
Charging for late booking
The consultancy firm said rates from Asia to the US West Coast have been reported at $15,000 per feu, with carriers charging an additional priority fee for a late booking.
“We expect rates to get close to $20,000 per day on some lanes,” Drewry said.
The analyst expects rates above historical five-year averages to continue in several trades.
“As of July, we are seeing extreme freight rates not only on the transpacific eastbound and Asia-to-Europe westbound routes, but on all headhaul and backhaul transpacific, Asia-Europe and transatlantic routes,” Drewry said.
Well above average
The premiums over the five-year historical average range reached $7,000 to $10,000 per feu on major routes from Asia.
That means some low-value products cannot be shipped.
Drewry forecasts this will be the first year that carriers’ profits will approach $100bn, and average freight rates jump by 50%.
Some shippers have reacted to the extreme situation by taking matters into their own hands by fixing their own containerships.
They are willing to pay vast sums to secure ships for voyages of short duration, charter brokers said.
For example, an unnamed Italian forwarder was recently reported to have fixed a 1,048-teu vessel for 12 months at $35,000 per day from China's StarOcean Marine.
But other forwarders and newer players were prepared to pay rates of more than $100,000 per day for vessels of between 2,000 teu and 3,000 teu on short periods.
Some of those vessels are destined for Asia-Europe services that are served by giant containerships.
