Persistent supply-chain bottlenecks are driving up rates and the shipping sector sees no relief on the horizon before 2022

Prices to ship containers from Asia to the U.S. and Europe are rising at a historic pace as cargo owners bid up rates in a search for ocean transportation capacity that shipping industry executives expect to remain tight for the rest of the year.

“Global trade right now is the hottest restaurant in town,” said Brian Bourke, chief growth officer at Seko Logistics, an Itasca, Ill.-based freight forwarder that handles large volumes of trans-Pacific shipments. “If you want to get a reservation, you need to plan it out two months in advance. Everyone’s trying to grab any spot they can and they’re all spoken for.”

Denmark-based shipping research group Sea-Intelligence ApS said a “staggering” 695 ships were more than a week late in arrivals at U.S. West Coast ports in the first five months of 2021. That compares with 1,535 such late arrivals during the entire period from 2012 to 2020, the group said.

“Everyone is spending much longer on round trips,” said Philip Damas, head of the Supply Chain Advisors practice at Drewry. “Containers are sitting on the water for much longer periods of time, containers are waiting at ports for much longer. Productivity in container shipping is deteriorating. Every failure is effectively creating ripple effects. It’s a vicious cycle.”

Mr. Damas said rate quotations for growing numbers of shipments are surpassing measures such as the Drewry index, the Shanghai Containerized Freight Index and the Freightos Baltic Index because the indexes generally capture spot booking prices that are being offered within about a week before a ship’s scheduled departure. With cargo owners scrambling to get goods moving, some ocean carriers are offering slots on ships past that point, when ships are at terminals and customers are pressing to get goods on board.

By Paul Page

July 5, 2021

Fm The Wall Street Journal