Lack of containers: sea freight prices soar

After a major shake-up of freight transport last year, the Covid-19 pandemic continues to weigh on this segment of maritime freight, which is now seeing its prices from Asia take off due to a lack of available containers. Stricter sanitary measures inside ports, logistics centres or empty container storage depots, which began at the beginning of the pandemic, always add their grains of sand at every stage of the supply chain to ultimately create bottlenecks. As the stock of containers is limited, the supply chain is sometimes broken.

After a major shake-up of freight transport last year, the Covid-19 pandemic continues to weigh on this segment of maritime freight, which is now seeing its prices from Asia take off due to a lack of available containers.

“The cost of shipping goods from China to Europe has recently reached unprecedented heights,” said ANDREAS Rees, analyst at UNICREDIT.

The Freightos Baltic Index, an index that measures the price of container shipping, has almost quadrupled in three months for the route from China to Europe, from $2,119 on November 1 to $7,827 in mid-February.

China’s share to the west coast of the United States rose from $1,638 on May 31 to $4,286 in mid-February.

The increase in demand for manufactured goods from Asia is the main cause of the soaring costs, explains Andreas RESS, in medical equipment first and consumer goods afterwards, encouraged by the purchasing power of households that “reorient” its spending strongly towards “electronic equipment, furniture, etc.”, for lack of travel or outings to restaurants.

As a result, “the demand for containers has increased exponentially,” jonathan Roach of specialist broker BRAEMAR ACM told AFP.

This situation is all the more short-lived in the industry as it was severely disrupted last year with a 4.1% decline in world maritime trade, according to an estimate made in November by the United Nations Conference on Trade and Development (UNCTAD).

Stricter sanitary measures inside ports, logistics centres or empty container storage depots, which began in the early days of the Covid-19 pandemic, always add their grains of sand at every stage of the supply chain to ultimately create bottlenecks.

“A delay in shipping empty containers to loading centres combined with an increase in cargo demand” and prices are soaring, Roach says.

The cost of transporting goods from China has been soaring for several months and has risen sharply in recent months as a result of the pandemic that is boosting demand for manufactured goods and changing consumption habits. A direct consequence of higher spending on consumer goods but also in the fall in air cargo capacity, analysts said. It seems, however, that this rise in prices should fall back as soon as “normal” “consumption patterns” return.

“There are several different measures of global shipping costs, but all point to a sharp increase in recent months,” Capital Economics analysts said.

The increase in shipping costs reflects a combination of factors, the main one being the change in consumption patterns caused by the pandemic.

“Without travel, concerts or dinners in the city, Europeans and North Americans spend their money on consumer goods, many of which are imported from Asia,” marc Levinson, an economist and historian, told AFP.

In addition, “air cargo capacity has dropped dramatically, forcing some goods to travel by sea,” adds Joanna KONINGS, an analyst at ING, “to add to the pressure on maritime cargo capacity and lead to higher prices and even shortages.

The outbreak “will likely be short-lived,” Analysts at Capital Economics said, as a result of vaccination campaigns and the expected lifting of containment measures allowing “consumption patterns to return to normal.” But no one really knows when….

(source AFP)