{"id":1121,"date":"2021-08-09T09:27:05","date_gmt":"2021-08-09T08:27:05","guid":{"rendered":"https:\/\/www.logistics.ie\/portal\/?p=1121"},"modified":"2021-08-12T16:37:02","modified_gmt":"2021-08-12T15:37:02","slug":"container-shipping-rates-have-never-been-higher","status":"publish","type":"post","link":"https:\/\/www.logistics.ie\/portal\/container-shipping-rates-have-never-been-higher\/","title":{"rendered":"Container Shipping Rates Have Never Been Higher"},"content":{"rendered":"

Shipping, and container shipping rates, are notoriously cyclical.<\/p>\n

Rates to ship a standard 40 foot container from Asia to Ireland historically have been around $2,000 – $3,000.\u00a0 Covid-19 reduced that significantly due to a slow down of factory production in Asia.\u00a0 But now rates have gone sharply in the opposite direction.<\/p>\n

At the time of writing (early August 2021) rates on the China\/East Asia to North Europe lanes have climbed to around $14,000.\u00a0 At the same time last year they were around $1,700.<\/p>\n

Rates on China\/East Asia to North America West Coast are even higher at over $18,000.\u00a0 Indeed there is anecdotal evidence of some companies paying $20,000 to secure a scarce slot.<\/p>\n

 <\/p>\n

Why are container shipping rates so high?<\/strong><\/h2>\n

A number of factors have conspired to push international container shipping rates so high, as well as more general price rises<\/a>.<\/p>\n

As Covid-19 restrictions lifted, factories rushed to fulfil pent up demand. During the pandemic for many consumers spending opportunities were few and they built up savings which they now wish to spend. Fiscal stimuli, in the US and elsewhere, have also pushed up demand.<\/p>\n

And then \u2013 due to the directional imbalances on East-West trades \u2013 empty containers had to be repositioned back to Asia (the problem of \u2018container dislocation\u2019).<\/p>\n

The blockage of the Suez Canal <\/em><\/a>in March created a massive bottleneck in global supply chains \u2013 and it wasn\u2019t just the days lost when the Canal was blocked. There were knock-on delays too as the finally released container ships queued to offload at destination ports.<\/p>\n

Myriad other problems also compounded matters: some observers for example have suggested that the partial closure of Yantian port in South China due to a Covid outbreak among workers had a greater impact than the Suez blockage.<\/p>\n

 <\/p>\n

But there’s still 140 days to Christmas \u2026<\/strong><\/h2>\n

The reason this is a problem now is that typically in the third quarter of the year companies begin to move product from Asia (the so-called \u2018World\u2019s Factory\u2019) in anticipation of demand in the fourth quarter centred on Thanksgiving and then Christmas. The Wall Street <\/em>Journal recently quoted<\/a> a representative from US based Seko Logistics as saying that \u2018Global Trade right now is the hottest restaurant in town\u2019 where if you need a reservation you need to plan it well in advance.<\/p>\n

The challenges around available capacity and freight rates show no sign of abating – importers and their logistics service providers in Ireland are well advised to plan ahead as far as possible. This is\u00a0 not a panacea of course, and forward booking capacity could further push up demand for scarce capacity with a predictable knock-on impact on prices.<\/p>\n

Some predict that rates will not calm down until the Chinese New Year in early 2023. What is certain is that, given how taut global supply chains are already at present, we do not need any further unexpected shocks to add to the severe difficulties that already exist.<\/p>\n

The next few months are set to be interesting and some flexibility may be needed around the wish list for Santa!<\/p>\n

 <\/p>\n","protected":false},"excerpt":{"rendered":"

International container shipping rates have been rising rapidly. Causes include the recovery from COVID, fiscal stimulus and blockages in supply chains. 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