Global Maritime Hub Logo
No Result
View All Result
  • Login
  • Premium Content
  • Blog
  • Events
  • Industry Links
    • Broker
    • Certification
    • Consultant
    • Industry Association
    • Institute & Think Tank
    • Legal Experts
    • Official Institution / Body
    • Port & Port Authority
    • Recruitment Specialist
    • Research & Market Data
    • Shipping Company
    • Industry Blog
    • Trade Media
    • Training & Education
  • Other Hubs
    • GLOBAL LNG HUB
    • EUROPEAN GAS HUB
    • THE COAL HUB
    • GLOBAL HYDROGEN HUB
    • CRITICAL MINERALS HUB
  • FREE TRIAL
  • My account
  • Login
Cart / €0.00

No products in the cart.

  • Premium Content
  • Blog
  • Events
  • Industry Links
    • Broker
    • Certification
    • Consultant
    • Industry Association
    • Institute & Think Tank
    • Legal Experts
    • Official Institution / Body
    • Port & Port Authority
    • Recruitment Specialist
    • Research & Market Data
    • Shipping Company
    • Industry Blog
    • Trade Media
    • Training & Education
  • Other Hubs
    • GLOBAL LNG HUB
    • EUROPEAN GAS HUB
    • THE COAL HUB
    • GLOBAL HYDROGEN HUB
    • CRITICAL MINERALS HUB
  • FREE TRIAL
  • My account
  • Login
Global Maritime Hub
No Result
View All Result
Home Ports and Terminals

5 reasons global shipping costs will continue to rise

Editor by Editor
4 years ago
Reading Time: 4 mins read
shipping costs
Share on FacebookShare on TwitterShare on Linkedin

Shipping costs have risen sharply and fierce competition for ocean freight capacity is the new normal. With new capacity only slowly coming onstream, freight rates are expected to continue to reach new highs this year and will remain above their pre-pandemic levels in the longer term.

RELATED POSTS

methanol-enabled-AXEL-MAERSK

The 16,592 TEU methanol-enabled AXEL MAERSK was recently delivered to Maersk, completing a first series of twelve Equinox-I type mainline container ships!

4 days ago
'large-cap'-valuation

Six public container carriers hit ‘large-cap’ valuation in May

4 days ago
US-volumes-test- tonnage-supply

US volumes test tonnage supply, uncertainty looms

4 days ago

No short-term relief
Shipping costs have been growing strongly since the autumn of 2020, but the first months of this year have seen a new surge in prices across different freight rates (dry bulk, containers) along major trade routes. Prices for several trade lanes have tripled compared to last year, and charter prices for container vessels have seen similar rises.

There is little sign of relief in the short term, and rates are therefore likely to continue spiking in the second half of this year, as rising global demand will continue to be met with limited increases in shipping capacity and the disruptive effects of local lockdowns. Even when new capacity arrives, container liners may continue to be more active in managing it, keeping freight rates at a higher level than before the pandemic.

Here are five reasons why costs aren’t going to come down anytime soon.

1. Continued global imbalances push prices up further

Problems that had built up from the beginning of the pandemic have included imbalances in the production and demand for goods, with countries locking down and opening up at different times, as well as shipping companies cutting the capacity on major routes and shortages of empty containers. As the recovery has progressed, global demand has recovered strongly, especially in the sectors which are most closely linked to international trade in goods. Competition for ocean freight capacity has intensified as economies open up further and inventories are rebuilt across the several links of supply chains.

global shipping costs

Year on year growth in freight rate indices, 2018 – May 2021 Source: China Ministry of Transport, Harper Petersen & Co. and Baltic Exchange via Macrobond, ING

2. Few alternatives to ocean freight
A lack of alternatives to ocean freight means it’s hard to avoid surging transport costs at the moment. For higher value products, alternative modes of transportation would normally be an option, such as the shipment of electronic devices by air or via train, not least through the ‘Silk Road’. But capacity is currently limited, and tariffs have spiked as well. Shippers of lower value products such as household items, toys, promotional articles or t-shirts have seen freight costs increase from around 5% of their sourcing costs to more than 20%.

The difficulty of absorbing increases on this scale in margins means that consumers may start to feel the impacts through price increases, or changes in product availability.

3. An unbalanced recovery throughout 2021

Some counties are already exporting more goods than they did before the pandemic, while in others, including the US, exports continue to lag behind the overall recovery in output. Trade in goods will rise further while not only the major trading countries, but also their trade partners, continue recovering. With the competition for ocean freight capacity set to remain, the unbalanced recovery will continue to exacerbate some of the problems for world trade, including displaced empty containers. It all adds up to more pressure on freight rates in the near term.

4. Reduced blank sailings will help ease capacity constraints

Globally, capacity on major shipping routes has recovered to levels before the major lockdowns in 2020, although blank sailings (cancelled port calls) continued to cut 10% of scheduled capacity through the first quarter. There are signs of improvement this quarter, which on current plans will average at 4%. But cancellations have partly been a response to delays, so while the system remains congested, shipping capacity may continue to be taken out of the system at short notice.

global shipping capacity

Total capacity on routes between Europe, North America and Asia, Source: eeSea, ING

5. Port congestion and closures keep creating delays

As the link between cancelled sailings and delays suggests, congestion is part of the problem. Shipping performance in 2021 has carried on where 2020 left off, in terms of lower rates of vessels keeping to schedule, and average delays for late vessels rising. There are some signs that average performance will start to improve as the share of vessels reaching their destinations on time stopped sliding in April, and average delays improved. But overall performance remains the lowest it has been in ten years of records.

container shipping performance

Source: Sea-Intelligence, ING

Flood of new container capacity will ease price pressures, but not before 2023

Container liners have enjoyed outstanding financial results during the pandemic, and over the first 5 months of 2021, new orders for container vessels reached a record high of 229 ships with a total cargo capacity of 2.2 million TEU. When the new capacity is ready for use, in 2023, it will represent a 6% increase after years of low deliveries, which the scrapping of old vessels is not expected to offset. Along with global growth moving past the catch-up phase of its recovery, the coming increase in ocean freight capacity will put downward pressure on shipping costs but won’t necessarily return freight rates to their pre-pandemic levels, as container liners seem to have learned to manage capacity better in their alliances.

In the near term, freight rates may yet reach new highs thanks to the combination of further increases in demand and the constraints of a congested system. And even when capacity constraints are eased, freight rates may remain at higher levels than before the pandemic.

Source: Joanna Konings & Rico Luman, ING

Tags: Container shippingINGJoanna KoningsOcean Freight Ratesport congestionRico Lumanshipping alliancesshipping costsshipping freight rates
Editor

Editor

Related Posts

methanol-enabled-AXEL-MAERSK
Shipping Trends

The 16,592 TEU methanol-enabled AXEL MAERSK was recently delivered to Maersk, completing a first series of twelve Equinox-I type mainline container ships!

4 days ago
'large-cap'-valuation
Shipping Trends

Six public container carriers hit ‘large-cap’ valuation in May

4 days ago
US-volumes-test- tonnage-supply
Shipping Trends

US volumes test tonnage supply, uncertainty looms

4 days ago
Panama-Canal
Shipping Trends

Neo Sub-Panamax Container Ships cross the Panama Canal in record numbers

2 weeks ago
liner-trade
Shipping Trends

Europe-Far East remains by far the largest liner trade!

2 weeks ago
LNG-series
Shipping Trends

ZCIS delivers first of LNG series to MSC

3 weeks ago

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

No Result
View All Result

Trending Posts

Fleet-size

Fleet size not a predictor of profit for mid-tier carriers

May 16, 2025
Hapag-Lloyd

Hapag Lloyd crosses the 2.4 MTeu milestone

May 22, 2025
MABUX-Index-W-21

Bunker fuel outlook, Week 21

May 22, 2025

Recent Post

methanol-enabled-AXEL-MAERSK

The 16,592 TEU methanol-enabled AXEL MAERSK was recently delivered to Maersk, completing a first series of twelve Equinox-I type mainline container ships!

June 12, 2025
'large-cap'-valuation

Six public container carriers hit ‘large-cap’ valuation in May

June 12, 2025
US-volumes-test- tonnage-supply

US volumes test tonnage supply, uncertainty looms

June 12, 2025
MABUX-Index-W-24

Bunker fuel outlook, Week 24

June 12, 2025
Panama-Canal

Neo Sub-Panamax Container Ships cross the Panama Canal in record numbers

June 5, 2025
liner-trade

Europe-Far East remains by far the largest liner trade!

June 5, 2025
Global-Maritime-Hub- Logo

Online platform for sharing information & analysis on trade, shipping, ports and the maritime business more info

Categories

  • Shipping Economic Trends & Regions
  • Ports & Terminals
  • Piracy & Security
  • Emissions, Fuel Technology & Environment
  • Economic Impact
  • Financing
  • Ship Building
  • Hinterland & Intermodal
  • Offshore Vessels
  • Port Environmental Impact
  • Shipping Workforce

Recent Posts

The 16,592 TEU methanol-enabled AXEL MAERSK was recently delivered to Maersk, completing a first series of twelve Equinox-I type mainline container ships!

Six public container carriers hit ‘large-cap’ valuation in May

US volumes test tonnage supply, uncertainty looms

Weekly Updates

Sign up to receive our weekly newsletter (each Thursday) with new shipping industry market reports, presentations & analysis.

Your subscription could not be saved. Please try again.
Your subscription has been successful.

By signing up, I agree to our TOS and Privacy Policy.

© 2020 GlobalMaritimeHub | All Rights Reserved

Welcome Back!

Login to your account below

Forgotten Password?

Retrieve your password

Please enter your username or email address to reset your password.

Log In
No Result
View All Result
  • Premium Content
  • Blog
  • Events
  • Industry Links
    • Broker
    • Certification
    • Consultant
    • Industry Association
    • Institute & Think Tank
    • Legal Experts
    • Official Institution / Body
    • Port & Port Authority
    • Recruitment Specialist
    • Research & Market Data
    • Shipping Company
    • Industry Blog
    • Trade Media
    • Training & Education
  • Other Hubs
    • GLOBAL LNG HUB
    • EUROPEAN GAS HUB
    • THE COAL HUB
    • GLOBAL HYDROGEN HUB
    • CRITICAL MINERALS HUB
  • FREE TRIAL
  • My account
  • Login

© 2020 GlobalMaritimeHub | All Rights Reserved

This website uses cookies. By continuing to use this website you are giving consent to cookies being used. Visit our Privacy and Cookie Policy.

Brighten Up Your Thursday!

SIGN UP to receive our free weekly newsletter with new shipping market reports, presentations & analysis! EVERY THURSDAY!