Transportation & Logistics Analysis

High ocean freight rates here to stay

April 15 2021

Helped by strong demand, container shipping freight rates stayed at high levels in March. The prospect of an early summer turn-round in the market in favour of shippers is starting to look unlikely.

The shipping companies are continuing to push average transport prices upwards. Clients are increasingly relying on digital applications which are offering them "take it or leave it" rates and there is little room for traditional-style negotiations. In this way, the shipping companies are able to increase average prices on the main routes.

It should be said that the balance of power is favourable to them. Demand is continuing to increase, while services are still disrupted.

The grounding of the Ever Given, which paralysed shipping in the Suez Canal for six days, aggravated the already considerable disorganisation of shipping services, creating new delays and synchronisation failures. Additional fuel surcharges were imposed on clients as ships went round the Cape of Good Hope although they did not have to pay to transit the Suez Canal.

The prospect of an early summer turn-round in the market in shippers' favour is starting to look unlikely. At this stage, only two things could reverse the trend: state intervention to regulate the market or the arrival of one or more new operators. There could be attempts to set up digital platforms by people attracted by the current high returns on the market.

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Expert in Ocean shipping for 25 years, Jerome puts all his knowledge of the industry to contribution for Upply. Ship captain at heart, he has written the English-French Lexicon of Containerized Shipping (Paris: CELSE, 2001).