The Shipowner Said Bluntly: Freight Rates And Prices Have Risen!

In 2022, both the container shipping market and the bulk carrier shipping market will be full of momentum. The BDI index recorded its best week in 8 months on Friday, soaring more than 36% to close at 1,941 points, approaching 2,000 points, up nearly 40% in a week.

Container freight is still running at a high level. According to the latest data from the Shanghai Shipping Exchange on February 11, the Shanghai Export Container Freight Index was reported at 4980.93, although it fell 29.43 points from the previous issue, it was still at a high level and fluctuated.

Xeneta's long-term contract data shows that this year's contract prices have risen further on the basis of growth in all of 2021. In the first half of last year, the long-term average contract price for the Asia-US West Coast was $3,000/FEU. By October, the price had risen to $6000-6500/FEU. “In 2022, we see $7,000 to $8,000 as an early indicator,” Berglund said.

According to industry analysis, the main reasons why shipping costs may continue to be "crazy" in 2022 are:

1. The dock workers in the West and the United States exchange contracts, and the port faces strikes and closures. Since the outbreak of the West American terminal, there have been continuous ups and downs, and it has continued to the current port congestion. In addition, a large-scale outbreak of dock workers has caused nearly 1,800 workers to be affected. Recently, the wharf workers in the western United States have been caught up in the wage negotiation turmoil. If the negotiation is not smooth, once the workers strike, the freight rate may "rise beyond the sky". Some shipping sources said that once the labor and management conflict and cannot reach a consensus before July 1, there will be problems such as slowdowns, strikes, and port closures, resulting in serious port congestion.

In fact, under the cloud of the negotiation between the dock workers in the United States and the West, some shipping giants have quietly raised freight rates. Evergreen, HMM, ONE and ZIM, etc., have notified customers that they will add a comprehensive rate surcharge (GRI) from Asia to the United States from today (February 15); and sources, including Evergreen, Shipping giants such as HMM, ONE, Yang Ming and ZIM have also successively notified customers that they will increase the comprehensive rate surcharge from Asia to the United States from March 1, of which each FEU will be charged an additional US$1,000 , an increase of about 15%.

Industry veterans recalled that during the 1999 West American dock workers strike, each FEU once hit a new high of 3,000 US dollars, which is about a multiple before the strike; and the current freight rate per large container on the US West Line has reached as high as 13,000 to 15,000 US dollars, and it will rise again. It really broke the sky.

2. The Russian-Ukrainian crisis has intensified the risk of ship navigation, and the BDI index has risen sharply! The shipping industry is a trans-regional international industry, which is greatly affected by international factors and geopolitics. Ships sailing at sea bring a lot of risk, which also makes the shipping industry soar.

If the crisis between the two countries worsens, it may involve global trade in natural gas, grain, and coal shipping chains. So much so that some bulk carrier owners have said bluntly: freight rates and prices have risen!

People in the industry generally believe that the salary negotiation of dock workers in the United States and the West may become one of the important decisive factors affecting the global supply chain this year. In addition, the Black Sea and Azov Sea shipping crises caused by the Russian-Ukrainian crisis will help the two fires. In the future, the freight rate for the whole year of this year may be soaring under the extension of the epidemic.