Soaring maritime freight rates, backlogs of ships in harbours, container shortages - these issues had a serious impact on global trade during the supply chain crisis of the New Crown epidemic. Now, the crisis has resurfaced as the shipping industry enters another busy period.
‘There is a range of uncertainties in the global maritime supply chain,’ said Peter Sander, chief analyst at Xeneta, ‘and the speed and rate of the recent spike [in rates] has taken the market by surprise,’ he went on to added.
Sander pointed out that on Friday, spot rates for 40-foot (about 12 metres) containers from China to Northern Europe reached $4,615, almost 3.5 times the May 1 rate, but below the January 2022 all-time high of $14,407. This price does not include the $10,000 ‘diamond’ freight rate for priority cargoes.
The spot rate from China to the US East Coast reached $6,061. That compares with $2,772 on 1 May and a record $11,900 in January 2022.
The container industry's woes date back to last December. At that time, shipping companies such as Maersk and Hapag-Lloyd shifted ships from the Red Sea and Suez Canal to avoid Houthi attacks in Yemen. Ships travelling from China to Europe and China to the US East Coast instead sailed around Africa, leading to a chain of disruptions and rising costs for supply chains that rely on ocean-going vessels. These ships transport about 80 per cent of international trade.
Pricing experts say spot rates will continue to rise as retailers such as Walmart and Target stock up on merchandise for back-to-school, Thanksgiving and Christmas holidays, and as manufacturers and importers scramble to source goods to avoid possible tariff hikes.
According to Judah Levine, head of research at Freightos, ‘In the short term, we're going to see a major crisis in the form of sharply rising freight rates and increased delays.’
Linerlytica said in a recent report that port congestion in China and other Asian countries is putting pressure on a container shipping market already plagued by a shortage of ship space and equipment. Singapore, the world's second busiest container port, is also currently facing serious delays. Some ships have even cancelled calls there, disrupting plans for downstream ports.
Empty containers are also building up in Sri Lanka and the UAE, while China and Singapore are experiencing shortages, said Koray Kose, chief industry officer at Everstream Analytics.
‘We are sailing into a storm,’ Kose said.
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