International shipping rates have reached an all-time high.
International shipping rates have reached an all-time high. The freight cost in Northern Europe has exceeded 20,000 US dollars, and the rate for the US West Coast has reached as high as 25,000 US dollars! The freight charges in Northern Europe have exceeded the $20,000 mark, with the cross-Pacific to the US West Coast quote reaching as high as $25,000. The tightness in the transportation market has not been alleviated yet, and the freight rates in the container shipping market will continue to set new historical records.
With the gradual recovery of economic activities in Europe and the US and the growth in market demand for various goods, the import demand from Europe and the US has remained at a high level. However, situations such as container congestion at ports, ship detours, poor transportation turnover, and port congestion have become the norm, and the tightness in the transportation market has not been alleviated temporarily. The freight rates in the container shipping market will continue to reach historical highs.
The short-term freight charges from China to Northern Europe have exceeded the $20,000 per 40-foot mark, while the shipping company quotes for cross-Pacific to the US West Coast are as high as $25,000. It was reported last week that the quote from Shanghai to Los Angeles reached $32,000.
According to foreign data, in July, the top five shipping companies gave a quote of $21,000 per 40-foot for goods from Chinese ports to Felixstowe and Southampton ports, with an average price of around $18,000.
Although these significantly increased rates include additional charges to ensure equipment and space, some shippers complain that their goods are still getting rolled.
"We paid their absurd fees and thought it was over," said a freight agent. "But later, we found out from local agents that the boxes were still on the dock. Clearly, there is another FAK increase opportunity on the next cargo ship, which means their so-called premium insurance is worthless."
As the peak season approaches, the situation for shippers heading to Europe and the US seems to be getting worse. They will need to be prepared for the next round of FAK and GRI price hikes starting from July 1st, as well as another fee increase starting from mid-July and thousands of dollars in PSS (Peak Season Surcharge).
Jon Monroe of Jon Monroe Consulting said that carriers have the ability to "manipulate freight rates" through cargo rolled, which indicates that the US Shipping Act needs to be updated to include a cap on freight rate increases and damages for non-performance of contracts by both parties.
Meanwhile, Craig Grossgart, the senior vice president of global shipping at Seko Logistics, has confirmed that a shipper quoted $32,000 for a 40-foot container from Shanghai to Los Angeles last week. "Honestly, I think this is a polite way for the carriers to indicate that they don't want to accept their business," Grossgart said.
Nevertheless, he said that he has proposed a quote of $25,000 per 40-foot to a shipper who needs to transport 300 containers from Shanghai and Yantian to Los Angeles next month - "This is a serious quote."
As the premiums increase, coupled with a large number of other fees, the gap between the spot market index and the actual payment rate is widening week by week. For example, the Baltic Exchange and Freightos' Global Container Freight Index (Freightos Baltic Index) recently showed that the Nordic freight rate index was $10,979 per 40-foot, the Mediterranean freight rate index was $11,098, the FBX index for the US West Coast was $6,905, and the FBX index for the US East Coast was $9,891.
Drewry's World Container Index released on the 24th recorded the largest increase since its establishment in 2012. It further rose by 15.9%, reaching $8,061.65 per FEU, an increase of $1,104, and a 332% increase compared to the same period in 2020.
Meanwhile, the latest Shanghai Container Freight Rate Index (SCFI) for last Friday rose by 37 points to a new high of 3,785.40 points, an increase of 1.0% compared to the previous period.
Lars Jensen, the CEO of consulting firm Vespucci Maritime, commented on the latest record-breaking freight rates, saying: "It is expected that all capacity transactions will face upward pressure."