Ships and containers in Asia have been restricted by the week-long blockage of the Suez Canal, leading to a sharp rise in immediate shipping rates for containers on popular shipping routes such as Europe and the United States, and continued congestion at ports.
Port congestion continued into the third quarter
At a briefing last week for Herberot, the world's fifth-largest shipping company, CEO Rolf Habben Jansen said he expected the container market to remain congested until the third quarter.
"Not only in the United States, but many ports in Europe and Asia, to some extent, have congestion, which means that at the moment, shipping companies actually need a lot of ship capacity to carry the same number of containers." Habben Jansen says.
"Simply put, for each service, if you want to continue providing a weekly service, you will need one or two more ships, depending in part on whether it goes to the US or Europe. Of course, we are also seeing a reduction in some port capacity because there are labor shortages or restrictions related to the outbreak in many places." "He added.
Jansen further explains that short-term shipping rates have soared due to the crowded market and high demand.
Price hikes on all airlines!
As of last week, the effects of the week-long blockage in the Suez Canal were beginning to be felt, with "significant increases" in spot rates for shipping containers to and from Asia to Europe and the US.
On the trans-Pacific trade route, the Freightos Baltic Exchange (FBX) index from Asia to the west coast of the US rose 4% last week to $5,375 /FEU, up 251% from a year ago.
The Ningbo Container Freighting Index (NCFI) for the Nordic and Mediterranean region surged 8.7% last Friday, almost in line with Shanghai's base freight to Europe (SCFI) rate of US $3,964 /TEU, up 8.6% from the previous period. "Shipping lines have collectively pushed up rates for April, with booking prices rising sharply," NCFI commented.
For Persian Gulf routes, the last SCFI rate (sea freight and sea surcharge) is US $1624 /TEU, an increase of 8.0% compared with the last SCFI rate.
For South America routes, the last SCFI freight rate (sea freight and sea surcharge) is USD7155 /TEU, 3.8% higher than the last SCFI rate.
Balance between supply and demand
While Heberot's CEO sees congestion in Europe through roughly the third quarter and in the U.S. through the end or beginning of the second quarter, he still thinks supply and demand will look good in 2021 and 2022.
Habben Jansen said: "I would say that when you look at 2021 and 2022, the development of supply and demand actually looks quite balanced. It also means that when the surge in demand returns to normal, we will return to normal."
Asked if abnormal markets could continue into the fourth quarter, he said: "I think one of the things we've learned over the last 12 months is never say never. I think now, given underlying demand, the peak we're seeing in the late second half of 2020 is likely to flatten out. We just need to address these congestion-related issues now and hopefully we'll be able to do that in the next few months."