How long will the sea freight increase last?

How long will the sea freight increase last?

According to Drewry, there are two driving factors for the high freight rate of container transportation, one is the change of consumption mode driven by the epidemic, and the other is the interruption of the supply chain.

Drewry predicts that port congestion and equipment shortages will plague the entire 2021, and the carrier will also lock in 2022 profits through the high freight contract signed this year. Because for the carrier, things after 2022 may not be so easy.

Shipping information company Sea Intelligence also stated on Monday that major ports in Europe and North America are still struggling to cope with the serious congestion caused by the booming container market in recent months.

According to data from the South Korean container transport company HMM, the analysis company found that there is currently no substantial evidence that the (port congestion) problem in Europe and North America has been improved.

Both the shortage of containers and the uneven distribution of containers provide support for rising shipping costs. Taking China-US shipping prices as an example, data from the Shanghai Shipping Exchange shows that in mid-March, the shipping price from Shanghai to the west coast of the United States has risen to US$3,999 (approximately RMB 26,263) for a 40-foot container, which is the same as the same period in 2020. That’s an increase of 250%.

Analysts at Morgan Stanley MUFG Securities said that compared with the annual contract fee in 2020, the current spot freight rate has a gap of 3 to 4 times.

According to the latest forecasts of analysts from Japan’s Okazaki Securities, if the shortage of containers and ship detention cannot be resolved, the rare high freight rates at this stage will continue until at least June. It should be noted that the "big ship jam" in the Suez Canal seems to make the operation of global containers "worse worse" when the global container balance has not yet been restored.

It can be seen that the unstable and high freight rates will be a long-term problem, so we must prepare for this in advance.