Hard to Find A Cabin​! The Freight Rate Will Increase Before The Chinese New Year!

Many reasons have caused container freight rates to rise

Recently, due to the combined effects of strong shipping demand, port delays and shortage of container equipment, container spot freight rates continue to rise and reach new highs. It is expected that they will continue to rise until the Chinese New Year holiday in January.

According to the latest issue of the Ningbo Container Freight Index (NCFI), under the background of continued tight capacity, 15 of the 21 routes showed a small increase.

From Asia to Northern Europe, Drewry’s World Container Index (WCI) was flat at US$13,564 per 40 feet, the Baltic Freight Index (FBX) rose 1% to US$14,345, and the latest Xeneta Index (XSI-C) rose 3% to US$14,345. $14,443 per 40 feet.

According to reports, some shipping companies now provide freight forwarders and non-vessel carriers with Asia-Northern Europe rates for only two weeks, and they refuse to sign any short-term contracts before the Chinese New Year in February.

A UK-based non-vessel carrier with an office in China stated that its carrier representative has been “making excuses” for delaying contract negotiations, and “either lies or is true regarding the carrier’s contract policy next year. Was not told".

For this shipper and many other small and medium-sized carrier customers, there is a lot of uncertainty in its 2022 budget. "For a long time, we haven't seen anyone offer or fulfill the transaction except spot freight. Everyone is saying'Talk about it after the Lunar New Year'," he added.

Based on the information currently collected, it is generally believed that if the freight rate is too high, the regulatory agency will intervene. But in fact, at least in the United States, this will not happen. Federal Maritime Commission (FMC) Chairman Daniel Maffei made it clear in a speech this year that if high freight rates are caused by market forces, then FMC is currently powerless.

Another British freight forwarding company stated that he was “worried about the worst-case scenario” and that other carriers would follow Maersk's example, effectively excluding smaller shippers from enjoying any stability in freight rates next year. He said: "Our customers want to know how much their shipping costs will be next year, and now there are only a few weeks away, we really have no idea."

At the same time, on trans-Pacific routes, Drewry’s World Container Index (WCI) showed that Asia-Western US freight rates rose by 5% to 10,138 US dollars/FEU, and Eastern US freight rates rose 4% to 13,118 US dollars/FEU. The Baltic shipping price index FBX, which includes insurance premiums, showed a slight increase of 1% to US$14,924/FEU to the West of the United States, and a 3% increase to US$17,195/FEU to the East of the United States.

Although the peak season for this route is over, NCFI's comments pointed out that demand is "still at a high level."

Among the vessels still waiting for berth at the San Pedro Bay ports in Los Angeles and Long Beach, the Panamax “Zhong Gu ShanDong” temporarily chartered by 3398teu has been berthed for 55 days. The specific berth is still There is no clear time. The cost of this idleness alone means a huge cost to the tenant, which, according to an agent’s estimate, exceeds $5 million.

When will the "hard to find a cabin" alleviate?

Soaring freight rates are not only detrimental to trading companies, but will also bring huge risks and uncertainties to shipping companies in the long run.

The international shipping giant CMA CGM has made it clear that from September this year to February 2022, it will stop rising freight rates in the spot market. Hapag-Lloyd also stated that it has taken measures to freeze freight rate increases.

"It is expected that the end of 2021 and the beginning of 2022 will usher in the inflection point of the peak freight rate in the market, and the freight rate will gradually enter the callback space. Of course, the uncertain impact of emergencies cannot be ruled out." Chief Consultant of Shanghai International Shipping Research Center, International Shipping Research Institute Director Zhang Yongfeng said.

Objectively speaking, due to the increase in the cost of various factors, it is difficult for the freight rate to return to the level of 2016 to 2019.

Considering the current high freight rates, more and more cargo owners are inclined to sign long-term agreements to lock in freight rates, and the proportion of long-term agreements in the market is gradually increasing.

As far as the country is concerned, government departments are also actively working hard. It is understood that the Ministry of Transport, the Ministry of Commerce and other relevant departments have implemented active policies to ensure the stability of the international industrial chain supply chain from expanding container production, guiding liner companies to expand capacity, and improving logistics service efficiency.