The global freight market is experiencing a dramatic turnaround from last year's slump. According to the latest Drewry report, container shipping rates on major Asia-Europe trade lanes have reached their highest level in 20 months, with average increases setting new five-year records. This upward trend signals rising transportation costs for shippers worldwide - and industry analysts warn this may only be the beginning.
What's Driving the Price Surge?
Drewry anticipates further rate hikes as Chinese New Year approaches, with shipping volumes expected to climb significantly. Since Hanjin Shipping's bankruptcy, average rates across 11 major trade routes have skyrocketed by 62%. Philip Damas, head of Drewry's logistics practice, noted that his team had forecasted this upward pricing trend as early as September 2016, advising clients to prepare accordingly. He projects double-digit percentage increases in 2017 contract rates between carriers and shippers, with new contract negotiations imminent.
Breaking Down the Numbers
Shipping lines implemented across-the-board rate increases effective January 1, 2017. Key benchmarks include:
- Shanghai to Rotterdam: 13% increase to $2,210 per 40-foot container
- Rotterdam to New York: $1,770 per 40-foot container
- Shanghai to Los Angeles: $2,106 per 40-foot container - a $545 jump from the final week of 2016
Strategies to Mitigate Rising Costs
With sustained rate increases expected, shippers should consider these approaches to maintain profitability:
- Advance planning: Avoid peak season congestion by shipping early to secure lower rates
- Route optimization: Evaluate alternative lanes, carriers, or transport modes for cost efficiency
- Carrier negotiations: Maintain open communication with shipping lines for favorable contract terms
- Market monitoring: Stay informed about rate fluctuations to adjust logistics strategies accordingly
The container shipping rate escalation presents a new reality for global trade. Proactive preparation and strategic adjustments will be essential for businesses to maintain competitive advantage in this evolving market landscape.