Contract freight rates are still gaining ground despite a slowdown in August
AN EASING in the rate of contract freight rate increases in August is not necessarily a bellwether for better conditions in the global supply chain and relief from soaring costs is unlikely to come soon.
Figures compiled by freight rate visibility platform Xeneta showed long-term contracted ocean freight rates rose just 2.2% during the month.
It followed a 28.1% rise in July, meaning that contract rates are now 85.5% higher now than this time last year.
“In the context of 2021, a 2.2% monthly increase in rates appears modest, but in any other year this is an excellent result for carriers,” said Xeneta chief executive Patrik Berglund. “Remember, this is yet another rise on the back of the largest-ever monthly increase in July. So, while some may have been expecting — read ‘hoping for’ if you’re a cargo owner — an adjustment downwards, we’re seeing a further demonstration of the powerful position liner operators find themselves in.”
Box lines continued to hold all the cards, and were “winning big”, he said.
Increasing port congestion and relentless demand would continue ahead of the all-important pre-Christmas period, Xeneta said.
A record 47 containerships were waiting for berths off Long Beach and Los Angeles on August 30, for example, and while the Meishan terminal at Ningbo has reopened, there are still delays in getting containers through the terminal.
“While we can’t be certain of a repeat of the astronomical monthly increases the industry has grown accustomed to, further gains are certainly not of the question,” Mr Berglund said. “There’s still a dearth of equipment, high demand and, worryingly, very congested ports that are choking up the supply chain for shippers and retailers.”
In Europe, Maersk is advising customers of wait times up to 10 days at Antwerp, while Hapag-Lloyd reports that voyage delays have tripled in the first half of 2021 compared with the same period last year.
A round trip between Asia and Europe was now taking approximately 100 days to complete, said Mr Berglund.
“With the holiday season logistical rush round the corner things may get worse before they get better,” he said. “That will have an obvious knock-on effect on rates.”
Xeneta’s August’s long-term XSI index showed import and export benchmarks edging upwards across all important trading corridors.
In Europe imports rose by 0.5%, while exports climbed 3.4%. Although the pace of growth has slowed compared to recent months, it still leaves the respective benchmarks up 123% and 49.1% year on year.
Results in Asia followed a similar pattern, with imports nudging up a further 0.8%, (up 50.5% since August 2020) and exports jumping by 2.5%, to take the annual increase to 115.5%.
Lloyd's List — 31 Aug 2021