The last year has seen a large rise in the amount of freight being transported by sea - and the latest data shows the trend continues to be upward.
Data provided by freight forwarder Flexport has indicated that rates have continued to rise in the first half of May from the already elevated levels seen in April, with a “severe capacity crunch” taking place. It added: “Carriers indicate an extremely strong backlog of bookings that are already pushing well through May and into mid-June. “
Freight forwarding services providers certainly have a big job on their hands in the current circumstances, with steps being taken to ensure freight gets transported including firms booking cargo space three weeks before the cargo is ready to be transported.
Alongside capacity issues, costs are now rising. The average prices on the routes from Asia to the West Coast of the US are now 3.2 times what they were a year ago, with these soaring trans-Pacific costs expected to continue rising for the time being. The latest Freightos Baltic Daily Index said rates were up 15 per cent in this region since the start of the month.
Clearly there are limits to how far these upward trends can go, as affordability and capacity are increasingly placed under strain.
As Bloomberg reports, there are firms operating in the sector that believe the overheating market will soon start to cool. One such firm is Maersk, which indicated in a conference call that by next year things will have calmed down significantly. Chief Executive Officer Soren Skou said the firm wants to “ensure a soft landing from the current elevated freight rates.”
However, while it expects rates to fall, head of ocean products Johan Sigsgaard said these will “normalise at a level above historical”, meaning firms can still expect significant cost pressures next year.
