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Container shipping rates continue to rise in 2021
Container rates are continuing to climb driving carriers’ profits while shippers continue to struggle with the ever-increasing costs. All major trade corridors have seen rate growth during the first five months of 2021 and fresh records continue to bet set.
The market intelligence firm Xeneta reports that the historically high long-term contracted container rates are being pushed to new heights. During May their analyses show an additional nine percent surge in prices, and they foresee little relief in the months ahead.
Between 2016 and 2020, container rates while fluctuating never exceed $3,000 according to Drewry Shipping Consultant’s data. Rates, however, have been on a steady increase since last summer and the beginning of the recovery from the lows of the pandemic. Drewry’s composite exceeded $5,000 for the first time in 2021 and on one of the hardest high routes, China to Rotterdam, the rate has just exceeded $10,000 for the first time.
Drewry’s World Container Index illustrates just how dramatic the increase has been. According to data released on May 27, the rate for a standard 40-foot container shipped from Shanghai to Rotterdam is up 485 percent year-over-over and a further three percent in the last week to an almost unbelievable $10,174. The composite which looks at eight of the world’s primary shipping rates is up 293 percent year-over-year and a further two percent last week to $6,257.
“As nations gradually emerge from the worst of the pandemic, and more equipment and capacity is introduced, it’s possible we’ll see some relaxation in rates… but, in the short-term, the carriers appear to be holding all the cards,” said Patrik Berglund CEO of Xeneta. “Certainly, some fascinating, and nail-biting, times await,” he says looking at what’s ahead for the markets. He points out that the current market is a struggle between carriers seeking to realize the opportunities and shippers who find themselves caught by tight capacity and few options to control costs.
According to the latest market intelligence from Xeneta’s Long-Term XSI Public Indices, which crowdsources rates from leading shippers and freight forwarders, the global benchmark has risen by 34.5 percent since the start of 2021. Its data shows that all major trade corridors have seen rate growth, and much of it spectacular, across the first five months of 2021. Xeneta says Far East export and European imports are leading the way with both up by over 50 percent in 2021.
“A lack of equipment and the ongoing ramifications of coronavirus, added to unforeseen factors such as the blocking of the Suez Canal, have squeezed supply chains, pushing capacity to bursting point,” says Berglund. “This leaves stressed shippers facing increasingly one-sided negotiations and, even when contracts are signed, the potential of rolled cargos and broken agreements as operators take advantage of massively lucrative spot rates.”
In Europe, Xeneta’s import benchmark rose for the sixth consecutive month, increasing by nearly four percent in May for a cumulative increase of 53.5 percent since the beginning of 2021. European exports, meanwhile, jumped by 8.6 percent. The Far East also experienced substantial monthly gains across both imports and exports while in the US the import benchmark rising had its highest single monthly increase in two years.
“With carriers blanking sailings to manage capacity, added to continuing high demand and reduced retail inventories, it’s difficult to see the prospect of any immediate rates relief on the horizon,” forecasts Berglund. He however points out that markets remain so volatile that the situation can change overnight.
Full article here: https://maritime-executive.com/article/container-rates-continue-to-set-new-highs-in-2021