In the past three months, freight rates for container liners have continued to climb and warehouse shortages have become prevalent. Against the backdrop of a limited shipping capacity, in addition to skyrocketing shipping freights costs and difficulty in booking available containers, during the peak freight season, cargo owners were frequently informed that the containers that they booked on popular routes were no longer available. So, how long will this situation continue? Experts say it won't be too long now.
In recent weeks, the spot freight rates for container shipment between the East and the West have remained at historically high levels.
According to the latest Shanghai Export Container Freight Index (SCFI), in trans-Pacific trade, freight rates still maintain an upward trend. It is almost certain that the climbing freight rates are related to the shortage of containers in Asia and the limited shipping capacity.
Sea-Intelligence, a global leading shipping analysis agency, warned that these record-breaking freight rates will not last long. Although freights of the routes between Asia to the west and east coasts of the United States have stayed at record levels in the past three months, shipping companies have injected a lot of capacity into these routes and the United States is in recession.
Sea-Intelligence pointed out that shipping companies have injected record capacity in the fourth quarter. In order to meet the current high level of demand, the weekly capacity of trans-Pacific routes will increase by 20% in the fourth quarter. After the significant drop in capacity in the previous period, container liner companies not only resumed services but also increased the capacity of some routes by one-fifth compared with last year. However, as the economic situation deteriorates, there are questions about whether demand will last.
The container liner companies did not curb the shipping capacity in order to increase the freight rate, but rather restored capacity and even increased capacity at a rate rarely seen in history. The high freights seen may be the result of the fact that when demand recovered, liner companies were not able to increase capacity quickly enough to keep up with the growth of demand. In addition to the trans-Pacific route, the capacity of routes between Asia and Europe and Asia and South America are also recovering.
