Long-term contracted ocean freight rates rocketed by a further 16.3% over the course of November, consolidating recent gains to leave container shipping costs up 121.2% year-on-year. The latest developments, revealed in the Xeneta Shipping Index (XSI®) Public Indices, stand as the second largest monthly rates rise on record, following a 28.1% jump in July this year, with all major shipping corridors experiencing significant growth. Leading carriers are, as a result, reaping breath-taking financial rewards.

One-sided contest

“When will it end?” comments Patrik Berglund, CEO of Oslo-based Xeneta. “Shippers hoping for some much-needed rates relief have been left punch-drunk by another round of hefty blows to  bottom line costs. The continued perfect storm of high demand, maxed-out capacity, port congestion, changing consumer habits, and general supply chain disruption is fuelling a rates explosion that, quite frankly, we’ve never seen the like of.

“What’s more, it’s difficult to see a change of course ahead, with the fundamentals stacked very much in favour of the carrier community. In short, they’ve never had it so good, while many shippers, unfortunately, are well and truly on the ropes.”

Rich rewards

In a stunning demonstration of this current reality, carriers released a glut of jaw dropping results over November. French giant CMA CGM posted a Q3 net profit of USD 5.6bn, with consolidated revenue climbing 89% year-on-year. Meanwhile, Cosco Shipping Holdings saw its net profit surge by a staggering 1651% over the first nine months of 2021, driven by increased volumes and higher freight rates. Revenues grew by 117.5% to USD 33.24bn.

Israeli line Zim also displayed its strength with a threefold year-on-year rise in revenues and an EBITDA of USD 2.08bn (against USD 262m in Q3 2020). The improvement was facilitated by a 174% increase in average revenue per TEU.

“With contracts continuing to be secured at high rates, and no sign of dropping demand, the carriers are understandably bullish,” comments Berglund. “Many have announced, or are already well underway with, fleet expansion initiatives and plans for new routes, so it’ll be interesting to see how this impacts on a complex rates picture. Market intelligence, like that provided through the XSI®, will help stakeholders keep up to speed with developments and secure value in tough negotiations. That knowledge is an absolute necessity right now.”

Regional perspectives

Xeneta’s XSI®, which is compiled from the very latest crowd-sourced ocean freight rate data from leading shippers, details significant gains across every single regional benchmark through November. In Europe, imports climbed by 9.1%, with the index now 143.3% up year-on-year, while exports jumped 23.7%, the largest monthly increase on record (and 85% up against last November).

The Far East saw similarly strong gains on both import and export benchmarks, with the previous up by 14.6% and the latter 14.5% (year-on-year hikes of 65.5% and 163.3% respectively). In the US the picture was even more pronounced for imports, which rocketed by 39.3% in November (up 122.4% compared to the equivalent period of 2020), while exports climbed by a healthy 9% (26.2% up year-on-year).

Keeping control

“2021 will be a year to remember for carriers and one to forget, if that’s possible, for the shipper community,” concludes Berglund. “What lies ahead is unclear, but we can see there’s action planned to try and ease congestion at major US ports – with the Federal Maritime Commission (FMC) announcing the launch of six supply chain innovation teams – while newbuilds, potential new players and the growing trend of shippers chartering their own vessels might affect the current, stressed supply and logistics chains.

“Only time will tell, but for now it’s difficult to rule out further rates gains in the coming months. How big they will be is up for debate… and that’s why we’d recommend everyone to tap into the latest insights and intelligence to try and assert a level of flexibility and control in this unpredictable market.”

Xeneta’s XSI® is compiled from the very latest crowd-sourced ocean freight rate data aggregated worldwide. Companies participating in the benchmarking and market analytics platform include names such as ABB, Electrolux, Continental, Unilever, Nestle, L’Oréal, Thyssenkrupp, Volvo Group and John Deere, amongst others.