A fresh surge in container freight rates toward year end — on the heels of a bullish run-up since the second quarter — is having a ripple effect across commodity markets including metals, petrochemicals and agriculture in December, posing logistical challenges and spurring sharp rises in product prices.
These markets are likely to have to continue grappling with elevated container freight rates in the first quarter of 2021 amid expectations that the current logistics bottlenecks and challenges will take months to resolve.
The Platts Container Index, which is based on a weighted average of all Platts container assessments, was up 143% from the start of the year and at its highest since it was launched in July 2017 at $2,756.35/FEU on Dec. 1.
The surge was initially underpinned by gains in key trade routes such as North Asia-US and more recently a spike in North Asia-Europe prices, the impact of which was spilling over into other trade lanes.
Prices from North Asia to the east and west coasts of North America turned bullish in May as demand for goods such as personal protective equipment and home office equipment surged due to the pandemic, and the run-up to China’s Golden Week holidays in early October in particular spurred a surge in rates.
Expectations of a seasonal year-end lull in prices were upended when North Asia-Europe container freight rates hit new highs, creating a knock-on effect on other trade lanes globally.
“There is an acute container shortage across Asia. Spot bookings now need to be made at least 21 to 25 days in advance to ensure availability of containers as well as to get space on ships,” an India-based freight forwarder said.
A freight forwarder in Thailand said: “We have to reject many bookings as there are no empties; most of my time now just goes in arranging for an empty container.”
The reaction across commodity markets has been mixed, with many products seeing prices spike as shipping options diminish.
Source: Platts Shipping
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