The continued peak in ocean container demand is keeping ports congested, equipment scarce and creating knock on effects on ocean rates -- beyond the Asia-U.S .lanes that are generating most of the demand, according to Freightos.
Prices from Asia to the Mediterranean – which are normally 37% lower than Asia-U.S. East Coast rates – skyrocketed 36% to $5,455/FEU, up 130% since November, 205% year on year, and surpassing Asia-U.S. East Coast by 10%.
Rates for Asia-North Europe climbed 21% this week to nearly $4,600/FEU, a 117% increase since the start of November.
- China-U.S. West Coast prices (FBX01 Daily) went unchanged at $3,876/FEU. This rate is 164% higher than the same time last year. In practice, with additional surcharges, this can reach even higher.
- China-U.S. East Coast prices (FBX03 Daily) also were stable at $4,938/FEU, and are 84% higher than rates for this week last year.
In this most unusual year, with the pandemic wreaking havoc and economic data indicating recession, most observers expected global trade to decline significantly, Freightos reported. And in fact, for the first half of the year imports to the U.S. did just that.
But the unexpected shift in consumer habits and other impacts that sent ocean freight volumes climbing in June has kept demand strong enough that, against all odds, 2020 US retail imports are expected to end up 0.8% annually. Import volumes in H2 will likely push 2020 into a tie with the annual record set in 2018.
And multiple factors caused by this unanticipated still-surging H2 demand have combined for strange effects on ocean freight rates too.
As demand – especially from Asia to the US – outstrips capacity, port congestion and delays have caused a prolonged equipment shortage. And while ocean carriers hesitate to increase rates on Asia-U.S. lanes due to increased scrutiny from regulators – though surcharges can add thousands to the listed rate – scarce empty containers and strong demand are leading carriers to increase rates on the other major ex-Asia lanes.
Before the pandemic, rates to the Mediterranean from Asia were an average of 37% less expensive than Asia-U.S. East Coast prices. So the knock on effects of ocean freight demand to the U.S. have now helped make it $518 or 10% more expensive to ship a container from China to the Mediterranean than to the U.S.