Shipping Price Update 12th June 2024

Shipping Costs stories are making their way into major news sites.

Container costs are at an 18-month high from Asia to Europe due to the ongoing crisis in the Red Sea.

The Drewry’s World Container Index (WCI) has recorded substantial week-on-week gains of 14%, 17%, and 11% on the Shanghai-Rotterdam, Shanghai-Genoa, and Shanghai-Los Angeles routes, respectively, all due to the ongoing crisis in the Red Sea.

“Drewry expects freight rates ex-China to continue rising next week due to the onset of the early peak season,” the analyst said.

According to a report by the BBC this week, the spot rate surge is beginning to bleed through into retail prices on the high street, driving them up.

Analysts are sounding the alarm, warning that the higher shipping costs could trigger a new wave of inflation in the UK. Despite a recent dip to 2.3%, inflation could rebound due to the high shipping costs, potentially leading to a rise in retail prices.

“If the demand increase is the early start of the peak season, we can expect demand-side pressure to subside in a few months, and earlier than usual,” said Freightos head analyst Judah Levine.

“Just as rates climbed on a combination of pre-lunar new year demand and restricted capacity in the first months of the diversions and subsided once demand eased, prices and disruptions should decrease when peak season slows this time as well, although, until Red Sea traffic resumes, we can expect rates to fall no lower than their April floor,” he added.

Meanwhile, the increasing scarcity of equipment at export hubs in Asia has resulted in a surge in container prices, as reported by container trading platform Container xChange.

The average container price for 40-ft high-cube units in key Chinese ports rose by 45% last month, from $2,240 in April to $3,250. Prices for similar units were around $1,698 in November but reached $7,178 in September 2021, at the peak of the COVID-related surge in demand.

Shipping costs (and times) are out of our hands in terms of what we can do. We do look for the best costs, but sometimes, we are hamstrung by availability, and the shipping lines know this and push the charges because they can. There comes a point where the market pushes back and reduces orders, forcing the lines to reduce costs. We are not quite there, so let’s see if we can expect costs to continue to rise.