Hike in Container Shipping Rates As Consumer Demand Increases

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  • Container shipping rates are heading higher again, driven to new heights by unrelenting consumer demand and company restocking from Europe to the U.S.
  • After peaking in late 2020 and not budging much through the first quarter, the rate for a 40-foot container to Los Angeles from Shanghai hit $4,403 last week.
  • It is the highest in Drewry World Container Index data going back to 2011.
  • Cargo shippers on less-traveled transatlantic routes are feeling the sting, too: Rotterdam to New York surged to a record $3,500.

A recent news article published in the Drewry by Brendan Murray reveals that rates of container shipping are going high once again.

Fiscal and monetary floodgates

With their fiscal and monetary floodgates wide open, countries with advanced vaccine programs are countering Covid-19 headwinds of unemployment, weak services industries and restricted travel.

But the wave of stimulus buoying consumption has inundated the supply side — the manufacturers of goods that often rely on global distribution chains.

Last year’s picture

Last year the spike in seaborne freight rates was initially viewed as a short-term reaction to an historic demand shock in the early stages of the pandemic.

Now, it appears that sustained high rates and stretched capacity may extend into a second year as the world’s economic recovery gathers steam.

U.S. container imports

U.S. container imports on transpacific routes increased more than 50% in March compared with March 2019, and April and May volumes may be even higher, said Nerijus Poskus, vice president for global ocean at Flexport, a San Francisco-based freight forwarder.

Rates for May sailings are “going through the roof” — with some offers exceeding $10,000 per container and a few reaching $15,000, he said.

Missing from the widely cited rate indexes are hefty premiums the carriers charge to guarantee delivery or reduce the wait.

To shorten the journey through congested American ports, some shippers have routed cargo through Colombia or by loading onto different ships around Panama, Poskus said, “but those options are already gone.”

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Source: Drewry

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