Shipping rates from China to other regions begin falling back to earth

The cost of shipping goods from China to other regions has spiked in 2020, hitting record highs as a shortage of empty containers stemming from the pandemic disrupts global trade.

The cost of shipping a 40-foot container from Asia to northern Europe has increased from about $2,000 (€1,648) in November to more than $9,000, according to shippers and importers. ECHEMI sees shippers have been quoted rates above $10,000 from China to Europe in the last quarter of 2020. And the rates from China to Europe have jumped 142% over the same period, and by 103% to the Mediterranean in November 2020 via the Suez Canal. The Ningbo Containerised Freight Index from China to Singapore/Malaysia soared nearly 300% between early October 2020 and early December 2020.  

But the good news is that at the end of January 2021, we see the freight rates level has come down back.

>>China to Europe route

On January 22, the market tariff (ocean freight and ocean freight surcharge) from Shanghai export to Europe basic port was US$4,394/TEU, down 0.4% from the previous period.

>>China to Mediterranean route

On January 22, the market rate (ocean freight and ocean freight surcharge) from Shanghai to Mediterranean basic port was USD 4296/TEU, unchanged from the previous period.

>>China to North America route

On January 22, the market freight rate (ocean freight and ocean freight surcharge) from Shanghai export to the basic port of U.S. West and U.S. East was USD 3995/FEU and USD 4750/FEU respectively, down 1.5% and 1.0% respectively compared with the previous period.

>>China to South America route

On January 22, the market rate (ocean freight and ocean freight surcharge) from Shanghai export to South America basic port was USD 8870/TEU, down 0.4% compared with the previous period.

>>China to Persian Gulf route

On January 22, the market rate (ocean freight and ocean freight surcharge) from Shanghai to Persian Gulf basic port was USD1934/TEU, down 2.4% compared with the previous period.

>>China to Australia & New Zealand route

On January 22, the market rate (ocean freight and ocean freight surcharge) from Shanghai export to Australia and New Zealand basic port was USD 2406/TEU, unchanged from the previous period.

>>China to Japan route

Market rates dropped slightly. On Jan. 22, the China export to Japan route tariff index was 837.75 points.

The shortage of containers has been alleviated. According to the data of Shanghai Shipping Exchange weekly report, on January 22, the average loading rate of vessels in Shanghai port of European and Mediterranean routes was maintained above 95%, and some flights were shipped out at full load; the average loading rate of vessels in Shanghai port of U.S.-West and U.S.-East routes was close to full load level.

According to Alphaliner's data, from June 2020 to now, more than 2.2 million TEU idle capacity has resumed operation, and more than 600,000 TEU new vessels have been delivered to increase effective supply; there are still more than 1.1 million new vessels to be delivered in 2021. The above-mentioned nearly 4 million capacity will gradually ease the pressure.

According to the latest data from container monitor Container xChange, the equipment shortage that has been going on for months is expected to end, with the 20ft and 40ft container indices in Shanghai now improving to 0.34 and 0.37 respectively (note: an index of 0.5 indicates a balanced market, below 0.5 indicates a container shortage).

This value indicates that the availability of empty containers has improved significantly from the previous month's index of 0.13 (40ft). While the latest figure for January is well below 0.5 still in equipment shortage, the figure is starting to approach normal container shortage levels in China's major export markets.

China factories have started to produce containers vigorously in the second half of last year, with standard dry cargo container output increasing 100% in August 2020 compared to July, and continued to grow to nearly 300,000 TEU in September, the highest monthly output in nearly five years, and continued to maintain high output in October-November. Coupled with shipping companies' vigorous deployment of empty containers, the Chinese Spring Festival could become a turning point.