Peak season imminent, wishfully falling sea freight remains far away

Disordered container marine market and extreme performance have lasted for 1 year, which is a combined result of congestion, short empty containers, surging freight, short shipping capacity and tight trucks. Market participants worked on snatching box and shipping space. Shipping companies even raised additional charges. The freight rate of major routes including those from China to US and Europe has hit record high. Marine carriers will further raise rate from this week. The Freight All Kinds Rates from Asia to North Europe have been close $20,000 per all 40' container types, up remarkably by 1,000% compared with the spot rate one year ago. 

Source: Shanghai Shipping Exchange 

According to data from Shanghai Shipping Exchange, the China containerized freight index was at 3703.93, up 2.5% compared with last period.

European route:

On Jun 11, the freight rate from Shanghai to basic ports in Europe was at $6,355/TEU. As for the Mediterranean route, tight supply and demand was seen with high transportation demand and the average utilization rate of seats at Shanghai port was near 100%. On Jun 11, the freight rate from Shanghai to basic ports in Mediterranean was at $6,272/TEU.

Source: Shanghai Shipping Exchange 

North America route:

The control of pandemic pointed to better direction in US. The new confirmed COVID-19 cases declined with the deployment of vaccine, supportive to import transportation demand. Supply crunch maintained when the congestions of ports and low container turnover efficiency remained. The average utilization rate of seats in W/C America Service and E/C America Service was still near 100% at Shanghai port.

Source: Shanghai Shipping Exchange 

One insider said that current shipping space has to be booked at least one week in advance in Shanghai and the freight rate changes every day.

Congestion of boxes is very serious outside China while shipping space is very tight within China!

Short containers have been spread in many ports since the third quarter of 2020. It was even unlikely to snatch a container after $3,000 of extra charge paid under some routes. 

Anxious enterprises pushed up the selling price of containers. Price of 20’ container was at $1,600/mt in the first half of 2020 but has surged to $3,600, and that of hot 40’ container has soared to $5,950 now, which continued refreshing new high.

Data show that between 10,000 and 15,000 containers were stranded in California. At the British port of Felixstow, containers have spread from the port to the surrounding suburbs. There were more than 50,000 empty containers in Australian ports. At present, the stocks of empty containers in some important international ports are three times the normal level.

Except for hard-to-return boxes from abroad, the congestion at ports within China was another problem.

Recently, Yantian Port, the world's largest single container terminal, began to become congested due to current restrictions amid pandemic. The main driver of a new surge in almost all routes was the congestion crisis at ports in South China, particularly at Yantian, where as many as 40 ships were reported to be waiting to berth as of last week. "Congestion at Yantian Port has a much greater impact on the flow of goods across the Pacific than the earlier blockage of the Suez Canal."

The additional charge on marine market intensified: some shipping enterprises added many surcharges. The daily price increment of the world second largest shipping company, MSC, was as high as $3,798, the highest in history.

The traditional peak season of marine market will come while the pandemic in Shezhen and Guangzhou in South China and in some Southeast Asian nations affected the port operation. That means the wishfully falling sea freight may remain far, far away.

How long will hot marine industry sustain? Some insiders said that whether the COVID-19 pandemic will be effectively controlled is crucial. Based on current status, many market players expected that this round of price surge and tight containers may be unlikely to finish by the end of 2021.