Containers traveling between Asia and Europe are packed to capacity ahead of the upcoming Chinese New Year, and the lack of vessel space is sending shipping rates soaring.
Space isn’t expected to free up until after Chinese New Year and the high rates will likely hang on throughout January.
“As for beyond January, our opinion is that once Chinese New Year arrives, as usual the rates will drop from Feb. 1 onwards,” the U.K.’s Westbound Shipping Services said in a statement, adding, however, that rates may not fall as much as expected. “We can foresee vessel space being a change in the usual factors, meaning lines pulling out more vessels/strings, to cause more demand and a backlog of pre CNY [Chinese New Year] stock, will be enough to keep rates above the $1,800 per 40ft marker. Perhaps even higher.”
U.K. shipping consultancy Drewry said last month that ocean freight rates would rise this year and might pose a shock to those in the sector who had gotten used to the deflationary prices.
On Thursday, Drewry said freight rates for major East-West routes reached a 20-month high and are above the average rates for the last five years.
The latest reading on the composite index is $1,785 per 40ft container for the Rotterdam-New York route, $2,210 for Shanghai-Rotterdam, a 13 percent increase, and $2,106 for Shanghai-Los Angeles—which saw the biggest rate jump ($545) last week.
And Drewry said, with the volume upsurge, those rates are expected to climb even higher this week.
“Since last September, we have consistently and rightly warned our exporter and importer customers to expect rate increases in both the spot and contract markets,” Philip Damas, head of Drewry’s logistics practice, said in a statement, adding that 2017 contract rates are at risk of double-digit increases.