Long-term contracted ocean freight rates climbed by 7% in March, pushing shipping prices up 96.7% year-on-year, according to a report from the ocean and air freight rate benchmarking and market intelligence platform, Xeneta.
The upward trend in rates is mainly attributed to a combination of persistent demand, port congestion, equipment shortage and Covid-19 disruptions, facilitating huge profits for carriers in 2021.
Furthermore, among the last 18 months, only two months, December 2021 and January 2022 have recorded declines in global ocean freight rates, according to the latest Xeneta Shipping Index (XSI) Public Indices.
“Long-term rates are reaching all-time highs, and carriers are undoubtedly sitting pretty in contract negotiations, but there are signs that future adjustments may be edging onto the horizon,” said Xeneta CEO, Patrik Berglund, who pointed out that rates on key Far East-Europe trades are declining, with carriers such as Maersk and MSC announcing plans to void sailings to respond to the continuous demand.
In addition, a potential resurgence of Covid-19 in China, and resultant lockdowns, could add to a sense of increasing volatility and fluctuating demand, while port congestion in the US has transferred from West Coast ports to East Coast ports that could grow in the second quarter.
“It’s a very complex picture,” highlighted Berglund, who explains that “It’s impossible to forecast with any certainty, making it all the more essential for stakeholders to avail themselves of the very latest market intelligence before entering contract negotiations.”
In Europe, the imports benchmark surged by 7.7% in March, reaching a new all-time high, and now sits 87.1% up year-on-year, while exports advanced by 3.2%, equating to a 72.5% increase over March 2021, according to Xeneta’s data.
Meanwhile, Far East imports on the XSI jumped by 4.7%, moving the index up 52.1% year-on-year, with exports showing their strength in a 7.9% surge. This latter benchmark currently stands 92% up compared to March 2021, with gains recorded in 18 of the last 24 months.
The rates in the US followed a similar plot, as imports rose by 6.9%, offsetting the slight decline reported in February, and the index is 99.3% higher than the equivalent period of 2021.
Growth in the exports measure failed to keep pace, but there was still a 1.4% appreciation, leaving the index up 35.2% year-on-year, according to Xeneta’s figures.