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Container shortages and surging freight rates

Container shortages and surging freight rates

20. January 2021
Freight rates

Freight rates have been rising steadily for months. This is mainly due to the current container shortages. But back to the beginning, how did the container shortages actually come about?

There are several factors that have contributed to the container shortages. The main reason is COVID-19. Whereas China seems to have the Corona pandemic well under control again and has significantly boosted production, other countries like the USA, for example, are affected by closures, production stops and a lack of manpower. On the one hand, this delays the return of containers to Asia. Thus, a large number of containers are standing at the port while the demand for products from China has increased strongly. On the other hand, you see extreme demand fluctuations. With the enormous decrease in shipment volumes, the shipping lines reduced the number of ships to stabilize their costs. The reduced number of ships, in turn, limits the ability to collect all the empty containers. The result is that the capacities on the container ships are maxed out. The ports are congested, and the freight rates are increasing immensely.

Starting end of August to mid January, the FBX11 has shown that the prices for 40 ft containers from China to Europe have increased up to 350 %. The FBX stands for Freightos Baltic Index. It is the leading international Freight Rate Index, in cooperation with the Baltic Exchange, providing market rates for 40′ containers (FEUs). You can find more information at: http://fbx.freightos.com

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