Containerised Freight Rates Up 300% Year on Year

Containerised Freight Rates Up 300% Year on Year

Carriers meanwhile are rushing to add capacity to their fleets

The Containerized Freight Index is up 300% year-on-year this July, while Baltic Dry is up 85%.

The Red Sea crisis has done more than just add fuel costs to the global supply chain. It has also caused inordinate congestion and delays across the world's ports adding fuel to today's shipping spot rates - which are on fire.

Meanwhile, over 1.6 million TEUs of container shipping capacity have been added to the global fleet so far this year. Most of this has gone into making up for lost time and servicing longer shipping routes around the Cape of Good Hope.

But this rushed increase in the number of vessels also brings its own problems in the form of port congestions and long wait times for ships outside of port.

Despite carriers investing so much in adding new capacities, why have shipping spot rates been spiking in recent months?

The answer lies in capacities that are currently tied up in ships waiting for days outside of ports looking for the next available berth to unload their cargos. Carriers deploying a "ship bunching" strategy has further aggravated the situation.

From Shanghai to Singapore, from ports in the Mediterranean to the US coasts, the longer the ships wait outside of ports, the greater the chances of blank sailings, the cost of which is ultimately passed on to shippers.

As the traditional peak season begins, shippers can only hope this - often repeated - problematic scenario, will resolve itself sooner than later so that shipping rates cool, supply chains normalise and global trade continues to grow.

Watch: Rising Sea Levels Can Pose a Major Challenge for Electrification of Port Operations

Related Stories

No stories found.
logo
Transport and Logistics ME
www.transportandlogisticsme.com