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It had to happen eventually: container freight rates have topped out. The Freightos Baltic global container freight index peaked on September 10 at $11,109, fell to a still tasty $9,949 on October 8, recovered to $10,525 on November 5 but then tumbled to $9,202 on November 19, some 17% lower than the September peak. The decline has been most apparent in the key China / East Asia to the North American west coast. From a September 10 peak of $20,586 the index fell 22% to $16,004 on October 8, rallied to $18,730 on November 5 but then fell 24% to $14,185 on November 19, 32% down from the September peak. This fall is in spite of continuing congestion on the US west coast, with ships waiting an average of 17 days to come alongside in Los Angeles and 83 ships reported to be waiting on November 13. The US Department of Trade says that the number of ships waiting nine or more days has fallen 20% in November and that more cargo is diverting to other ports where waiting times are lower. For instance, Savannah has just opened a new, $230m, nine-track rail system and additional container storage around the state of Georgia. This has led to a 60% reduction in waiting times between the start of September and mid-November. Ocean shipping is benefiting from increasing air freight rates But inflation, rising incidence of Covid-19 and continuing disruption across the supply chain have combined to dent US consumer confidence. Freight rates might be four times higher than a year ago, but the worst of the congestion in the US would appear to be over – for now at least. On the Asia-Europe route, freight rates peaked at $14,703 on October 1 before sliding a marginal 3% to $14,219 on November, 12 since when they have rallied 0.8% to $14,335 on November 19. Considerably less volatility than on the Pacific, caused by less disruptive congestion, has given the Global Shippers’ Forum cause to suggest that rising inflation and interest rates could slow consumer demand and lead to a rapid slowdown in global demand for container shipping. Emile Hoogsteden, VP of commercial at Rotterdam, does not expect any changes to the current situation until at least the end of 2022, as long as everybody keeps spending and ordering online. Maersk, meanwhile, after recording the highest quarterly profit in more than a century ($6.9bn on $16bn revenue) said that it expects no change to high shipping costs and supply chain disruption until Q2 2022 at the earliest. Therein lies the conundrum for terminal and liner planners: will further restrictions on movement in Europe lead to more online spending on consumer goods, or will rising prices counter any lockdown boost to shopping? Should they look to route round any lockdown-related congestion or sit the fourth wave out? In recent days the transatlantic eastbound route from the US to UK / Cont has bucked the trend rising by a couple of hundred dollars following a seven-week slide. Ocean shipping seems to be benefiting here from increasing air freight rates which themselves are suffering congestion in their own peak season caused by scarce warehouse space and understaffed ground crews in the US and Europe, limiting air cargo capacity regardless of the high number of available aircraft. Air cargo has attracted Maersk’s interest as it has spent some of its bumper Q3 profits on a $644m acquisition of Germany’s Senator International. Meanwhile, the liners continue to spend this year’s profits on new ships with Seaspan and Evergreen leading the pack, with 51 and 46 orders apiece, totalling 568,000 teu and 420,000 teu respectively. The biggest beneficiary has been Samsung Heavy Industries in South Korea, whose Geoje yard has received 44 orders so far this year. But in a sign of the times, 280 orders of 1.92m teu have gone to Chinese yards compared to 136 orders or 1.48m teu at South Korean yards, just 21 orders at Japanese yards and four in Taiwan, all for CSBC. In total 441 container ships have been contracted in 2021 to date, totalling 3.54m teu. Despite the return of volatility in freight rates, there is still time before the holiday season to ink another 59 deals to be struck to reach a nice, round 500 for the year, a fitting signifier of an unexpectedly astonishing year.

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