Container shipping rates show no sign of decrease by year-end

Asia-Europe route passes the USD10,000 mark

According to Drewry World’s recent report container index, sea freight rates reached a new record high.

On May 27. The container shipping rates from Shanghai (China) to Rotterdam (Netherlands) reached USD 10,174, 485% up over the same period in 2020. This is the first time that the container freight rates for Asia-Europe routes exceed USD 10,000 oper cont. Adding the surcharges that shippers have to pay to ocean carriers, the total freight for a 40 ft container from Shanghai to Rotterdam is much higher.

Likewise, rates on Shanghai-Genoa gained to nearly USD 10,000 per feu, up 406%.

Rates from Shanghai to the US also surge. Similarly, spot rates from Shanghai to Los Angeles reached USD 7,147 per for a 40ft container, up 178% while the Shanghai – Los Angeles route rates were USD 5,742 per 40ft cont, up 238%.

The average composite index of the WCI, assessed by Drewry for year-to-date, is USD 5,243 per 40ft container, which is USD 3,348 higher than the five-year average of USD 1,895 per 40ft container.

Showing no sign of cooldown

In May, World Bank and HIS Markit released a new global Container Port Performance Index (CPPI). Accordingly, more than four-fifths of global merchandise trade by volume was transported by sea. In which, about 35% of the total volume and more than 60% of the commercial value were transported by containers.

The figures show how serious the upward trend of container shipping rates affects global trade. Meanwhile, congestion at ports continues to strain. The reason is not only from the lack of labor due to social distancing or blockade due to the Covid-19 pandemic, but also the strong increase in import demand in many large consuming markets.

According to data released by Panjiva Company in May 2021, sea freight imports into the US continued to increase in April 2021.

Total shipments to the United States in April 2021 stood at 1,188,688 lots, up 5.3% year-on-year and 25.3% higher than the beginning of this year.  Imports of containerized goods stood at 2,819,591 TEUs (equivalent to a 20 ft container), 25.5% up over the same period last year and 27.6% compared to the beginning of 2021. In particular, March marked the first time that imports of goods into the US exceeded 3 million TEU within a month when it reached 3,017,140 TEU.

Overall, in North America, the booming of container import shows no sign of a slowdown, and the congestion at North America's major container ports is expected to persist at least into the summer.

Due to the congestion situation, all container shipping firms keep the rates at high. Hapag-Lloyd recently announced a general rate increase (GRI). This shows that freight rates show no signs of deceleration by the end of this year.

According to VASEP, at the World Tuna Conference in 2021, Thue Barfod (in charge of the global seafood sector of the giant shipping company Maersk Line), also said that the high freight rates hint at no sign of reduction.

Barfod said, with affluent income, people in many key markets staying at home due to Covid-19 have spent significantly more on goods such as televisions, phones, clothes, radios, among others, most of which are exported from Asia. The new dry goods market is becoming "super hot". However, dry goods are shipped by the same container types as seafood, and this is an important reason for the increase in container rates in recent years.