Paying more for slower service: Maritime delays are still worsening, & shippers won’t be able to buy their way out

713 Views

Ocean carriers’ schedule reliability continues to decline, with delays of up to 30 days on the worst-hit China — EU routes, and 21.94 days on the worst-hit China-US West coast routes according to container tracking data from project44, the global leader in real-time supply chain visibility.

“If current circumstances hold, we’re going to see many more empty shelves heading into the holiday shopping season and beyond,” said Adam Compain, SVP Data Insights, project44

 “There’s no quick fix here. Unless demand drops significantly after the holiday rush, this could be a multi-year problem” said Josh Brazil VP, Data Insights, project44. 

Meanwhile, maritime short term contracted rates inked between carriers and Beneficial Cargo Owners (BCOs) and freight forwarders continue their multi-year rise across major trade lanes with average China — EU container rates rising by triple digits year-over-year across major port pairs, reaching $12,977/40’ Standard Dry container in August.

For China-US West Coast routes, short-term contracted rates were up 102% year-over-year to $6,570 last month, according to Xeneta, the leading ocean and air freight rate benchmarking and market analytics platform.

 “The whole container shipping industry is under incredible stress right now, and it’s going to keep building,” said Patrik Berglund, CEO, Xeneta 

While many factors causing the delays are market and pandemic-driven, such as increased demand for consumer goods and pandemic-related bottlenecks, carriers are cashing in on record revenues at the expense of shippers and a global economy where rising prices are ringing inflation alarm bells.

A drop in rates is not in sight as overall capacity will remain very tight. The upcoming tender season can be the toughest in ocean freight history for shippers,” concludes Patrik Berglund, CEO, Xeneta. 

 “Shippers can no longer absorb the costs. Sustained astronomical shipping rates coupled with a delayed supply are already causing inflationary pressures in the broader economy” said Josh Brazil VP, Data Insights, project44

  • Price and delay findings were compiled by analyzing project44’s and Xeneta’s proprietary global container movement data through to the end of August 2021.

  • Delays were measured as the difference between the scheduled, and actual arrival at the port of arrival.

  • Xeneta short-term rates refer to any contract that is valid for less than 32 days, sourced from shippers and freight forwarders.

 

Delays and Price Movements by Major EU and US Port Pairs:

Shanghai — Rotterdam:  Between August 2020, and August 2021, delays for containers moving between the Chinese port of Shanghai and the Netherlands’ Rotterdam port increased from a monthly median of 1.88 days to 15.19 days. Over the same time, the monthly average market price for China- EU routes for a 40-foot container increased from $1,650 to $12,977. These numbers represent a 25% year-over-year increase in median days of delay, and a 686% percent increase in the average shipping prices.

 

Yantian — Hamburg: Between August 2020, and August 2021, delays for containers moving between the Chinese port of Yantian and Germany’s Hamburg port increased from a monthly median of 0.47 days to 30.26 days – suggesting a serious breakdown in connectivity! Over the same time, the monthly average market price for China- EU routes for a 40-foot container increased from $1,650 to $12,977. These numbers represent a 707% year-over-year increase in median days of delay, against a 686% percent increase in the average shipping prices.

 

Yantian — Los Angeles: Between August 2020, and August 2021, delays for containers moving between the Chinese port of Yantian and the West Coast US port of Los Angeles increased from a monthly median of 2.46 days to 12.93 days. Over the same time, the monthly average market price for China- West Coast US routes for a 40-foot container increased from $3,247 to $6,570. These numbers represent a 425% year-over-year increase in median days of delay, and a 102% percent increase in the average shipping prices.

 

Shanghai – Long Beach:  Between August 2020, and August 2021, delays for containers moving between the Chinese port of Shanghai and the US West Coast port of Long Beach decreased from a monthly median of 6.62 days to 4.92 days – a slight improvement! However, over the same time, the monthly average market price for China — US West Coast routes for a 40-foot container increased from $3,247 to $6,570. These numbers represent a 25% year-over-year decrease in median days of delay, and a 102% percent increase in the average shipping prices.

 

While some US ports are still receiving shipments from China without serious delay (by 2021 standards) extant delays remain costly, and are worsening in most cases. Prices are rising across all major US ports, painting an overall negative picture for shippers in the US.

Looking to the EU, delays are more severe, and shipping costs have created an extremely challenging operating climate for businesses with China-EU supply chains.

Shippers looking to shift supply chains to airfreight are running up against similar dynamics in that market. Already high air freight rates are expected to keep ticking upwards in the coming peak season, suggesting that demand for capacity will outstrip supply out of Asia, regardless of the mode, and that shortages and price increases on the consumer level will extend into 2022.

 

Disclaimer: The data referenced in this release is sourced from project44’s freight visibility platform, based on the logistics indicators that the platform tracks. The sample data sets referenced do not include all freight movement data tracked by other entities. Data from project44’s platform reflects a statically significant sample size to draw conclusions.

For more details on the maritime shipping crisis, and to learn how project44 is helping its customers outmaneuver congestion and delays, please contact Josh Brazil – [email protected]