Due to the combined effects of strong shipping demand, port delays, and shortage of containers, the spot price of containers continued to rise and reached new highs. Part of the reasons for this price increase is the shortage of ships, as most of the capacity has been used on the popular trans-Pacific and Asia-Europe trade routes. In fact, in recent months, many ships have been moved from less popular trade routes to the Asian market. Shipping companies have transferred as much capacity as possible to facilitate the booming Asia-Europe and trans-Pacific trade. Nevertheless, there is no sign for the freight rate of the Asia and Northern Europe route to go down.
On May 17, Platts Container Rate 1 showed that the container freight rate of the North Asia and North Europe route soared to USD 12,000/FEU, an increase of USD 1,500/FEU from the previous week and almost tenfold of the USD 1,300/FEU estimated for this route one year ago.
The latest increase in freight rates came at a time when demand on major global routes continued to exceed supply. Compared with the beginning of the pandemic, the number of empty containers in circulation in the shipping industry has fallen sharply. This is mainly because once the containers are unloaded from the ship, due to the shortage of workers at the terminal, poor inland transportation, and the pandemic, the time of returning to the port has greatly increased. The whole world feels this. It may take some containers 4 weeks to return to the port after unloading, while at the beginning of 2020, it only took about 7 to 10 days. Due to the outbreak of the Covid pandemic in major hubs around the world, port delays have greatly reduced the availability of support staff, resulting in major delays.
For the European trade routes, the closure of the Suez Canal in March caused major bottlenecks in European ports. Although the ports were able to clean up some of the backlogs during the calmer period when container ships were not able to arrive, a large number of ships arrived at the port all at once in April, which led to longer waiting time, aggravating the market situation that was already under pressure. As the delays mean that the number of containers arriving at the port within the planned window has greatly reduced, carriers have been hit hard. Although carriers around the world have been working hard to secure new containers, there are people who are concerned that these containers will end up at the ports and bring more problems to shipping.
At present, all ships have used all of their capacity to transport fully loaded containers around the world, and carriers do not have a flexible system to relocate empty containers. Therefore, some market participants are concerned that due to the inability to relocate the containers to suitable areas, a large number of new containers will be stranded at the terminals and there will be further delays at the ports. Although the entire industry hopes that these logistics problems can be eased as soon as possible, at this moment it seems that these problems will at least last through the end of the third quarter.
In addition, Platts Container Rate 11 showed that the container freight rate of the North Asia and the UK route also hit a record high, rising from USD 1,325/FEU in the same period last year to USD 14,500/FEU.
Source: Foreign shipping