Asian Shipping Costs Skyrocket to $10,000 Amidst Rising Demand and Disruptions
According to a recent report in The Business Times, firms transporting goods from Asia are bracing for soaring shipping costs, with prices for an urgent full-size shipping container hitting a whopping $10,000 over the next month. This is reportedly almost double the current spot rates.
CMA CGM, the world’s third-largest carrier based in Marseille, France, has announced a rate of $7,000 for a 40-foot container for the latter half of June for goods shipped to Northern Europe from Asia. This is up from about $5,000 currently charged. Rates for the first half of June are expected to range from $6,000 to $6,500, with premium services priced between $7,500 and $10,000.
The surge in costs is attributed to a combination of factors, including more than five months of Houthi attacks on vessels in the Red Sea, which have stretched capacity significantly. The Houthi-led attacks in the Red Sea, targeting commercial and international shipping, have disrupted global shipping, forcing firms to re-route to longer and more expensive journeys around southern Africa. These attacks, in solidarity with the Palestinians, have created significant challenges for international shipping routes, particularly those leading to the Suez Canal.
The container shipping industry is struggling to meet growing demand from the US and Europe. Furthermore, importers are ordering more in anticipation of potential disruptions such as port congestion, labour strikes, and higher tariffs on Chinese goods.
Trien Nielsen, senior director and head of ocean EMEA at Flexport, said that companies are changing stock strategies and “responding to longer lead times, shifting normal shipping patterns,” as quoted by The Business Times. Flexport is a San Francisco-based logistics technology. Nielsen added that some firms were double-booking or increasing bookings to secure space.
The current situation recalls the shipping crisis in September 2021, when spot rates for 40-foot containers to the US West Coast from China soared above $20,000 due to a pandemic-induced demand surge. In December of the same year, the rate for shipments from China to Europe peaked at nearly $15,000, according to Freightos data compiled by Bloomberg.
