- Prices to ship containers from Asia to the U.S. and Europe are rising at a historic pace.
- Cargo owners bid up rates in a search for ocean transportation capacity that shipping industry executives expect to remain tight for the rest of the year.
A recent Wall Street Journal news article by Paul Page states that Container Shipping Prices Skyrocket as Rush to Move Goods Picks Up.
Shipping prices surge
The average price world-wide to ship a 40-foot container has more than quadrupled from a year ago, to $8,399 as of July 1, according to a global pricing index by London-based Drewry Shipping Consultants Ltd.
The measure has surged 53.5% since the first week of May.
Persistent supply-chain bottlenecks are driving up rates and the shipping sector sees no relief on the horizon before 2022.
Drewry’s measure
Listed prices to ship from China to major ports in Europe and the U.S. West Coast are closer to $12,000 a container.
Some companies say they are being charged $20,000 for last-minute agreements to get goods onto outbound vessels.
Experts’ views
Philip Damas, head of the Supply Chain Advisors practice at Drewry
- Containers are sitting on the water for much longer periods of time, containers are waiting at ports for much longer.
- Productivity in container shipping is deteriorating.
Brian Bourke, chief growth officer at Seko Logistics, an Itasca
- Global trade right now is the hottest restaurant in town.
- To get a reservation, you need to plan it out two months in advance. Everyone’s trying to grab any spot they can and they’re all spoken for.
Zhu Guojin, a consultant at logistics firm Jizhi Supply Chain Service Yiwu Co
- Most do not seem to care about prices anymore.
- Last year, many clients delayed shipping in the hope that the cost could come down.
- But that’s no longer the case.
What is the present scenario?
Rate quotations for growing numbers of shipments are surpassing measures such as the Drewry index, the Shanghai Containerized Freight Index and the Freightos Baltic Index.
This is because the indexes generally capture spot booking prices that are being offered within about a week before a ship’s scheduled departure.
With cargo owners scrambling to get goods moving, some ocean carriers are offering slots on ships past that point, when ships are at terminals and customers are pressing to get goods on board.
Shippers are desperate to book
Now everything is overbooked.
Shippers are desperate to book tomorrow. It’s more a bidding war than it is a traditional tariff and this bidding war is accelerating.
Some of these $23,000, $24,000 prices include the inland distribution cost and that can easily add far more to the final cost.
What do the supply-chain experts say?
Supply-chain experts say the high rates leave many shippers, particularly those with relatively low-value goods, facing a choice: They can pay the prices and try to pass the costs on to their customers or retreat from overseas markets.
There is no end in sight. There is no way during this peak season that things will improve. The backlogs and delays will only deteriorate.
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Source: WSJ
