user

‘When will it end?’: November surge pushes freight rates to 121% yearly increase

Long-term contracted ocean freight rates rocketed by a further 16.3% over the course of November 2021, consolidating recent gains to leave container shipping costs up 121.2% year-on-year.

The latest developments, revealed in the Xeneta Shipping Index (XSI®) Public Indices for the contract market, stand as the second-largest monthly rates rise on record, following a 28.1% jump in July this year, with all major shipping corridors experiencing significant growth.

In Europe, imports climbed by 9.1%, with the index now 143.3% up year-on-year, while exports jumped 23.7%, the largest monthly increase on record (and 85% up against last November).

The Far East saw similarly strong gains on both import and export benchmarks, with the exports up by 14.6% and imports increasing by 14.5% (year-on-year hikes of 65.5% and 163.3% respectively).

In the US, imports rocketed by 39.3% in November (up 122.4% compared to the equivalent period of 2020), while exports climbed by 9% (26.2% up year-on-year).

Soaring freight rates has been one of the hottest topics in industry driving sky-high profits for container lines.

Leading carriers are reaping “breath-taking” financial rewards, Xeneta noted: French carrier giant CMA CGM posted a Q3 net profit of $5.6 billion, with consolidated revenue climbing 89% year-on-year.

Meanwhile, Cosco Shipping Holdings saw its net profit surge by a staggering 1651% over the first nine months of 2021, driven by increased volumes and higher freight rates. Revenues grew by 117.5% to $33.24 billion.

Israeli line ZIM also displayed its strength with a threefold year-on-year rise in revenues and an EBITDA of $2.08 billion (against $262 million in Q3 2020). The improvement was facilitated by a 174% increase in average revenue per TEU.

Patrik Berglund, CEO of Oslo-based Xeneta. “When will it end? Shippers hoping for some much-needed rates relief have been left punch-drunk by another round of hefty blows to bottom-line costs.

“The continued perfect storm of high demand, maxed-out capacity, port congestion, changing consumer habits, and general supply chain disruption is fuelling a rates explosion that, quite frankly, we’ve never seen the like of.

“What’s more, it’s difficult to see a change of course ahead, with the fundamentals stacked very much in favour of the carrier community. In short, they’ve never had it so good, while many shippers, unfortunately, are well and truly on the ropes.”

Berglund added that there is action planned to ease congestion at major US ports, with the Federal Maritime Commission (FMC) announcing the launch of six supply chain innovation teams.

“Only time will tell, but for now it’s difficult to rule out further rates gains in the coming months. How big they will be is up for debate… and that’s why we’d recommend everyone to tap into the latest insights and intelligence to try and assert a level of flexibility and control in this unpredictable market,” Berglund noted.

https://www.porttechnology.org/news/when-will-it-end-november-surge-pushes-freight-rates-to-121-yearly-increase/

  • Comments

  • 0 comments