Freight News
/
Shipping Rates Ease in October for the First Time since March 2020

Shipping Rates Ease in October for the First Time since March 2020

October 22, 2021
October 22, 2021
A ship sailing towards the port of Lamu in Kenya. The cost of freights declined marginally this month of October for the first time since March 2020. Photo: KPA.

A steady climb in shipping rates witnessed since March 2020 showed signs of easing this October for the first time in over a year.

The freight cost on the busy Shanghai-Los Angeles trade route for a 40-foot container sank by almost $1,000 last week to $11,173, representing a decline of eight percent, which analysts say is the steepest fall since March 2020.

But even with this decline, sea freight remains more expensive than it was before the outbreak of Covid-19, which negatively impacted global logistics.

Pundits are keenly observing if the latest easing in global shipping costs will halt the runaway cost witnessed in the last one year.

Judah Levine, group head of research at Hong Kong-based Freightos, is quoted by Bloomberg news saying the recent softness could be a reflection of a slower production in China during its Golden Week holiday combined with power restrictions in some regions.

“It’s possible some reduction in available supply is curbing container demand and freeing up some of the additional capacity that carriers have added during peak season,” he said.

“It is also possible that — with ocean delays making it increasingly unlikely that shipments not already moving will make it in time for the holidays — the price drop also shows that the peak of peak season is behind us,” Mr Levine told the Bloomberg news.

However, a gridlock of ships outside the ports of Los Angeles and Long Beach, where more than 60 vessels have been waiting for a berth to offload the cargo is creating pressure on the limited containers available.

It is estimated that about 200,000 shipping containers remain on ships off the coast of Los Angeles as of Monday this week.

"We have about two weeks' worth of work sitting at anchor right now," said Gene Seroka, the executive director of the Port of Los Angeles in an interview with CNN.

The recovery of the global supply chain has created a huge demand for shipping vessels, meaning shippers cannot meet the high demand for exports.

For instance, imports now take more than the maximum 40 days that it used to take for one to import a secondhand vehicle from an Asian country.

Most major shipping lines are focusing on trans-pacific routes at the expense of Africa because of the lucrative freight charges on that route.