Freight Rates on Asia-Europe Routes Reached a New High! Actual Freight Rates Reached $13-14,000, up 485% From the Same Period Last Year

Recently, the major freight indexes of container shipping from Asia to Europe set a new record in history, with the freight index exceeding US$10,000 for the first time, and the actual freight has reached the ceiling of US$15,00.

In the last week of May, Drewry's World Container Index (WCI) showed that the freight price of a 40-foot container from Shanghai, China to Rotterdam, the Netherlands rose to US$ 10,174, up 3.1% from last week and up 485% from a year ago.

On May 28th, Shanghai (Export) Containerized Freight Index (SCFI) released by Shanghai Shipping Exchange was 3495.76 points, up 1.8% from the previous period. For European routes, as the spread of epidemic slowed down, the local production and living needs steadily rebounded, and the market demand for transportation was stable. However, due to the blockage of Suez Canal in the early stage, shipping schedule disorder, port congestion and slow return of empty containers still exist, and market capacity allocation is still tense. According to SCFI data on the 28th, the freight rate (shipping and shipping surcharge) from Shanghai to Europe main port is US$5816/TEU; The freight rate (shipping and shipping surcharge) from Shanghai to Mediterranean main port is US$5811 /TEU.

At the same time, Freightos Baltic Indices(FBX) shows that the spot rate of Asia-Northern Europe routes rose by 9.1% to $9,871 per 40 feet, while that of Asia-Mediterranean routes rose by 6.1% to $10,214 per 40 feet.

The reality, of course, is that many customers are paying well above these rates as shipping lines increasingly charge additional fees such as space guarantees, which can easily reach $1,000 per container.

"The actual freight rate of a 40-foot high container (exported from China to the UK) is now $13,000 to $14,000, and I think we may reach $15,000”, said a British freight forwarder. He added,  "Some shippers cancel orders because the freight price offsets their profits, and the situation has become very worrying. I think this will lead to bankruptcy of shipping enterprises and take a heavy toll to the economy in the future."

While the transpacific and transatlantic regions may be relatively quiet in terms of price volatility, a new round of upward revisions to GRI for these deals is expected this week, with spot rates likely to spike again.

Patrik Berglund, founder and CEO of Xeneta, noted on 27: "After years of turmoil, carriers are determined to seize the current opportunity to capitalize on huge demand and growing online retail through new strategic initiatives." "For example, Hapag-Lloyd now plans to implement a GRI price of $3,000 per 40-foot in the Far East-U.S. route from mid-June given such favorable fundamentals."

Similarly, transatlantic carriers are preparing to impose new GRI and peak season surcharges ranging from $500 to $2,500 per TEU, Berglund said, adding that high spot rates also continue to have a significant impact on shippers and forwarders seeking long-term contracts. Equipment shortage and the continuous influence of COVID-19, together with unforeseen factors such as Suez Canal blockage, have squeezed the supply chain and pushed the production capacity to the explosion point. This makes the stressed shippers face unilateral negotiation. Even if the contract is signed, there may be the situation that the cargo rolled and the agreement broke down as carriers take advantage of lucrative spot rates.

Berglund said, "With shipping lines reducing sailings to manage capacity, coupled with continued high demand and reduced retail inventories, it is difficult to see the trend of immediate rate reductions."

Freight rates are already sky-high yet continue to rise. European lines has announced that from June 1st, the rate of each TEU will increase by 500 dollars, and that of high container will increase by 1,000 dollars. Shipping companies have indicated that the rate on U.S. line will also rise on June 1, but did not quote as late as the 27th.

The World Container Index published by Drewry shows that the comprehensive index of the eight major shipping routes is 2% higher than the previous week to 6,257 US dollars, with an annual growth rate of 293% which is the highest level since 2011.

It has been reported that this year, many container shippers in the United States and other regions have already paid more than 10,000 US dollars in freight after adding various expensive additional fees such as guarantee of on-time arrival and transportation for each container.

The container shipping market is getting worse and worse. Shipping companies and cargo operators pointed out that because of the delay in the shipping schedule and the outbreak of the epidemic, the port of Shenzhen Yantian port stopped receiving exports of heavy containers for 50 hours.At present, the waiting time in Shenzhen ports is 3~7 days, and Shanghai Port, which has the highest efficiency, also has the situation of waiting for one day. In May, the northwest coast route of the United States had eight flights expected to call Taiwan ports, but only three flights arrived.

 According to a shipping company, since this year, shipping companies have gradually evacuated imported goods destined for Long Beach, Los Angeles, to the northwest ports such as Auckland and Seattle, resulting in congestion in these ports. Industry sources said that the ships are unable to arrive on time due to the chaos of global shipping class. However, due to the demand of bills of exchange, shippers still deliver containers to the wharf as scheduled, resulting in the accumulation of containers in the port area. Shipping companies also pointed out that the container shipping market is still deteriorating, especially the problem of crew infection is expected to expand, and shippers should be prepared for the worst.