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Freight rates on major routes such as Europe and the United States have risen across the board! Hapag-Lloyd: Port congestion will continue into the third quarter

Due to the impact of the week-long Suez Canal obstruction, ships and containers in Asia have been restricted. Spot freight rates for containers on popular routes such as Europe and the United States have risen sharply, and ports will continue to be congested.

▌Port congestion continued into the third quarter

At the briefing of the world's fifth-largest shipping company Hapag-Lloyd last week, its CEO Rolf Habben Jansen said that he expects that the container market will still have congestion problems before the third quarter.

"Not only in the United States, Europe and many ports in Asia, there are congestion problems to a certain extent, which means that current shipping companies actually need a large amount of shipping capacity to transport the same number of containers." Habben Jansen said.

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"In simple terms, for each service, if you want to continue to provide weekly services, you will need to add one or two more ships, depending on whether it is going to the United States or Europe. Of course, we also see some Port capacity is reduced because of labor shortages or epidemic-related restrictions in many places.” He added.

Jansen further explained that due to market congestion and strong demand, short-term freight rates have soared.

▌All routes have increased prices!

As of last week, the consequences of the week-long blockage of the Suez Canal have begun to appear, and the spot freight rates of the Asian-Europe and American routes have "dramatically increased."

On the trans-Pacific trade route, the Freightos Baltic Exchange (FBX) index from Asia to the West Coast of the United States rose 4% last week to $5,375/FEU, an increase of 251% over the same period last year.

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As for the East Coast of the United States, the FBX index rose 3% to $6002/FEU, an increase of 108% over the same period last year.

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Last Friday, the North European and Mediterranean regions of Ningbo Container Freight Index (NCFI) surged by 8.7%, which is almost the same as the freight rate (ocean and ocean freight surcharges) (SCFI) of 3964 US dollars/TEU for exports from Shanghai to Europe’s basic port, up 8.6% from the previous period. Coincides with the growth. NCFI commented: "The shipping companies collectively pushed up the freight rate in April, and the booking price rose sharply."

For the Persian Gulf route, the SCFI freight rate (ocean and ocean surcharge) of the previous period was 1,624 USD/TEU, an increase of 8.0% from the previous period.

For South American routes, the SCFI freight rate (ocean and ocean freight surcharge) of the previous period was USD 7,155/TEU, an increase of 3.8% from the previous period.

▌Balance of supply and demand development

Although the CEO of Hapag-Lloyd believes that the congestion in Europe will continue until about the third quarter and the congestion in the United States until the end of the second quarter or the beginning of the third quarter, he still believes that the supply and demand situation in 2021 and 2022 will look like Not bad.

Habben Jansen said: "What I want to say is that when you look at 2021 and 2022, the development of supply and demand actually looks quite balanced. This also means that when the surge in demand returns to normal, we will return to normal."

When asked if the abnormal market might continue into the fourth quarter, he said: "I think one thing we have learned in the past 12 months is to never say forever. I think now, considering the potential demand , The peak we see at the end of the second half of 2020 may flatten out. We only need to solve these congestion-related problems now, and hope we can do this in the next few months."