Container rates to Europe from North Asia hit fresh all-time highs

New York — Freight rates from North Asia to both North Continent and the UK hit all-time highs on March 1, as demand continued at a firm level post the Lunar New Year holidays in February, and ongoing equipment shortages plagued the market, leaving carriers imposing PSS (Peak Season Surcharge) mechanisms in the market.

Platts Container Rate 1 – North Asia-to-North Continent – hit $9,750/FEU, an increase of 400% from Oct. 30, before the container rates started their rapid climb, and limited respite is expected until the middle of the year at the earliest.

Platts Container Rate 11 -- North Asia-to-UK – also hit fresh all-time highs at $11,000/FEU, an increase of 464% over the same period.

"There are still many issues surrounding the equipment shortages across the world," said a carrier source. "Demand is still very strong after Chinese New Year which very few people predicted, and it looks like we'll have high rates going forward for some time."

Demand has increased in recent weeks and months in Europe, with a bullish sentiment emanating from the coronavirus vaccine-related news, and the easing of restrictive measures across the continent. As a result, many in the market were expecting a bullish trend for rates going into March. With many GRIs (General Rate Increases) on the cards for March 1, rates appeared set to push to new all-time highs.

"Look at the impact the vaccine is having, we are going to ease restrictions across Europe by summer," a carrier source said. "Lots of shops don't have any stocks - they'll book now to try and beat the delays and get them to arrive in time. This is why we have Peak Season Surcharges already in the market at a time of year when we'd usually have lots of void sailings."

While the high freight rates have come as a boon for container carriers, shippers and cargo owners are being caught significantly in the headlights, with delayed cargo and soaring freight rates closing some arbitrage opportunities around the world.

"I've had customers almost in tears because these rates are so astronomical," a UK-based freight forwarder said. "Their main issue is that they will pay these really high rates, and then their cargo will still be rolled time and time again, so there is simply no winning for them."

This is a key time for the container freight market, with annual contract negotiations well under way in the market. After a year of soaring container rates and plunging availability, shippers are now trying to find the right strategy to approach long-term contract negotiations. Some are opting to go for early deals while others wait to see if spot rates cool off, leaving them in a better position to negotiate, and this diverse approach is causing headaches for all market players at this point.