Eastbound spot container freight rates have not just increased a lot since the COVID-19 outbreak started, they now exceed previous historical highs by an astounding 40%, according to data from Drewry.
The reading for the week for the Drewry Hong Kong-Los Angeles spot freight rate benchmark topped the previous record of US$2,880 per 40-foot container in 2012 by $1,201 or 41.7%, Drewry said in an analysis on September 24.
This as the record reading broke the $4,000 threshold to reach a 15-year high of $4,081 per 40-foot container for the week—more than double the long-term average price.
Drewry said this could be due to the unusual dynamics of market supply and demand currently at work.
At present, Asian container shipments to the US are very strong, shippers are replenishing their inventories, there is a shortage of empty boxes in China, and some shipping capacity has been taken out by carriers through cancelled sailings.
But also behind these exceptional freight rate levels is the higher level of concentration in the ocean carrier industry, combined with new, tighter capacity management discipline among carriers, it said.
“Ocean carriers seem to have come to realise the opportunity presented by the COVID-19 crisis and that by managing capacity closely, they can manage prices with potency,” said Drewry.
Regulators in China and the US are already watching the market closely, it added.
“Because spot rates tend to be leading indicators of contract rates, contract shippers/Beneficial Cargo Owners should start to budget for higher contract rates on most routes in 2021,” said Drewry.