Transportation & Logistics Analysis

Ocean freight rates continue to climb

June 23 2021

Ocean freight rates continued to rise in May on all the main East-West markets. The rise is being fuelled by strong Western demand against a background of growing uncertainty and concern about the feasibility of transport operations.

The United States and, with the exception of Germany, Europe are continuing to see their balance of trade with China deteriorate at a fast rate against a background of frenetic buying of Asian products by Westerners. American and European hopes of rebalancing trade with China by value have failed for the time being. Consumer demand should stay strong in the weeks to come, particularly since, on the pandemic front, things are finally getting better.

Widespread port congestion has brought additional uncertainty in a market which has already been badly shaken and is now functioning extremely inefficiently. This factor is adding to market tension which is already extreme under the impact of equipment shortages and ongoing blank sailings.

"Take it or leave it" freight rates

This context is favorable to the continued increase in ocean freight rates. The $10,000 per 40' HG dry container psychological barrier has been largely broken on the Asia/Europe spot import market. These rates are to be taken or left. 

The big international freight forwarders are following the upward trend with the shipping companies, leaving smaller forwarders by the wayside. The latter are struggling to buy space for their clients and are seeing their credit contracts eroded when they are not cancelled unilaterally by the shipping companies without warning.

So long as Western demand does not drop off and equipment and ship capacity are kept under control by operators, there will be no reversal of the trend. Conditions are such that the summer period should see market tension just as intense as it was in the first half.




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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).
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