This article is written by Austin Garcia
The third quarter of 2024 is set to be a record-breaking period for container freight rates, which are on an upward trend. The recent surge in rates in July is making a significant impact, leading to a substantial increase in shipping costs on major routes. Drewry’s global composite index witnessed a 10% rise yesterday, hitting $5,868 per FEU (forty-foot equivalent unit). Despite being 43% lower than the pandemic peak of $10,377 in September 2021, it’s still a whopping 313% above the average pre-pandemic rate of $1,420 in 2019. The rates on the four main east-west trade routes that Drewry monitors have more than doubled since the beginning of May. The Shanghai Containerized Freight Index, which was updated today, has also hit its highest point since August 2022, standing at 3733.8 points.
A report from the investment bank Jefferies indicates that the Asia-US routes are approaching the peak levels seen during the 2021/2022 surge, while other markets have yet to hit those heights. Judah Levine, the Head of Research at Freightos, suggested to Splash 24/7 that if the peak season, which started early in May, ends early as well, we could see congestion and rate levels peaking in July and August. This would provide some relief by October until the pressure builds up again in the run-up to the Lunar New Year. Levine also highlighted the steep rise in shipping costs for items such as Weber gas grills, which have gone up from $5.30 per grill in June 2019 to $30 per grill currently.
In recent weeks, retailers worldwide have been issuing profit warnings, citing high shipping costs, a trend reminiscent of the pandemic era. According to Drewry, freight rates from Shanghai to New York have gone up by 17% to $9,158 per 40-foot container, while rates from Shanghai to Los Angeles have increased by 12% to $7,472. Rates from Shanghai to Rotterdam and Genoa have seen similar increases. However, rates from Rotterdam to Shanghai and New York have experienced slight drops.
Drewry anticipates minor increases in freight rates from China as Asian ports continue to grapple with congestion issues. The average composite index for 2024 to date is $3,664 per 40-foot container, which is $909 above the 10-year average rate, inflated by the COVID-19 period.
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