Asia-Europe Container Rates climb to 10-Year High
Container freight rates across the world’s busiest ocean trade route ( Asia – Europe) continued to surge this week to a 10-year high, adding to strains on major shipping lanes as Western retailers rush to restock ahead of the year-end holidays.
Yesterday’s Shanghai Containerized Freight Index (SCFI) cumulative reading hit a new record of 2,311.71, representing a 162% increase on the same week last year.
The average spot-market price to ship a 20-foot box from Asia to Europe hit $2,091 this week, surpassing the $2,000 mark for the first time since May 2010. The rate has more than doubled from $1,029 at the end of August.
According to Splash247, rates on almost all tradelanes have leapt in recent months with the cost and difficulties of shipping products making regular mainstream media headlines and getting regulators around the world to investigate the soaring prices. The strong bull run is also expected to play into liners’ hands when contract negotiations restart next year.
The Wall Street Journal stated that the surge follows a sharp increase in rates from Asia to the U.S., where they reached record highs in September ahead of holiday-season restocking efforts. The high prices, the result of a rush in demand that far outweighs shipping capacity, has jolted supply chains, triggering equipment shortages as shipping lines have raced to get vessels and containers in place to handle the loads.
Jonathan Roach a container shipping analyst at London-based Braemar ACM Shipbroking said to the WSJ “Europe is following the American surge in consumer online spending, compounded by increased imports of personal protection equipment and the pre-Brexit, U.K. stockpiling,”
Freight rates are expected to stay high into the first quarter as global supply chains continue to recover from the disruptions earlier this year caused by the Covid-19 lockdowns and then ease in the spring.
“The extraordinary consumer demand during lockdown has a time limit,” Mr. Roach said. “We expect consumer behavior to noticeably switch towards travel, entertainment and hospitality in the second half and demand for manufactured goods to return to more traditional levels.”
Lars Jensen from SeaIntelligence Consulting, suggested that the SCFI is in some cases significantly underestimating the actual rates paid as there are additional fees related to equipment and space availability.
“Anecdotal evidence already points to de facto rate levels for some shipments of up to 10,000 USD/FFE on Asia-Europe and Transpacific,” Jensen wrote.