Global container shipping rates have surged to records. A spike in restocking demand in the US and Europe. Container scarcity at export hubs causes rates to soar. Moreover, the changes in freight flows, because of the coronavirus pandemic, shipping sources said.
The Freightos Baltic Global Container Index (FBX) increased to $2,359 per forty-foot equivalent (FEU) container this week. It was the highest on record and up 30% since July 1. The FBX is a weighted average of 12 major global container routes.
This week, the cost to ship a container from China to the U.S. East Coast topped $4,750. It was up 42% since July and a new record, according to data. The U.S. East Coast is a key global retail market.
Since July 1, the China to U.S. West Coast rate is up nearly 50%, to $3,878 per container.
Also, since July, the Harpex Shipping Index has more than doubled to 947 points currently, the highest since September 2008. This shipping index tracks container ship charter rates.
Container rates have also climbed on a surge, aside from the restocking swell. This is due to orders from firms that usually ship goods in the belly of passenger jets. But now, container vessels must be used while much of the global air fleet remains grounded.
Also, boosting rates was the uneven worldwide distribution of containers. Disruptions to logistics channels due to coronavirus lockdowns are causing this uneven distribution.
In major economies, the evolving pandemic situation may abruptly change the trajectory of rates next year. Moreover, container costs are expected to stay high through the end of 2020.
We shouldn’t forget how quickly all U.S. and European importers canceled existing purchasing orders with factories in March/April. That is even though the carriers are claiming to be booked fully, all the way to Chinese New Year. This was according to Lars Jensen, chief executive at SeaIntelligence Consulting.
He said consumers would likely cut spending as unemployment rises, reducing container demand. That is, if the pandemic worsens and leads to stricter lockdowns and deeper recessions.
Furthermore, container demand could also decline if the pandemic is quickly brought under control. That’s because consumers would start spending more on services such as travel and less on goods, said Jensen.
If most economies continue opening up and closing down, container rates will remain supported. That’s because services spending would stay depressed and goods demand would stay strong, he added.