Facebook Pinterest Search Icon SourcingJournal_horiz Tumbler Twitter Shape photo-camera graph-trend Shape latest-news icon / user

Capacity Issues Send Container Freight Rates Soaring to Four-Year Highs

Join Theory, Google, H&M, McKinsey, Foot Locker, Lafayette 148, LL Bean, the Retail Prophet and more at Sourcing Journal’s Virtual Sourcing Summit, R/Evolution: Overhauling Fashion’s Outmoded Supply Chain, Oct 14 & 15.

To ship a container of product from northern Europe to China just got 45 percent more expensive.

That’s the highest it’s been in four years and even shipping experts are alarmed.

“Our sources reported that ships are currently full and that carriers have demanded much higher rates—only some prior rate agreements remain in place,” said Philip Damas, head of Drewry Shipping Consultants’ logistics practice.

The route from Rotterdam to Shanghai came in at $1,076 per 40-foot container in the second week of March, compared to $740 in the first.

The spike, according to Drewry, is “highly unusual” for the Europe to Asia route where ships typically have loads at 70 percent capacity, which begs the question about why there were the capacity issues. The assumption is that cancelled sailings from China following Chinese New Year pressured capacity.

Rates on the reverse route—China to northern Europe—however, are falling. A 40-foot container sailed the route for an average of $1,643 early in the month, down from $1,756 the previous week and $2,212 around the same time in January.

As of March 9, Drewry said its World Container Index, which looks at rates on 11 routes to and from the U.S., China and Europe, was 110 percent higher than at the same time last year when the container shipping sector faced weak traffic volume and a price war.

“The latest jump in the Europe-to-Asia index will mean that shipper contract rates governed by an index mechanism will be adjusted upwards in the next few weeks,” Drewry said.

In other logistics pricing news, the U.S. Justice Department just subpoenaed top executives at some of the world’s biggest container shippers on the matter of price-fixing. Maersk Line and Hapag-Lloyd were two of those served.

Sources close to the matter told The Wall Street Journal the Justice Department served the CEOs of these companies at a meeting they were all part of, and served other smaller operators at their U.S. offices.

Though the subpoenas reportedly haven’t levied any specific allegations, the Justice Department will investigate whether certain ocean carriers are using their alliances for price fixing, sharing port calls and vessels to save billions in operating costs.

Related Articles

More from our brands

Access exclusive content Become a Member Today!