Why is sea freight rate soaring?

1.Recovery of the global economy and trade: As major economies such as the United States and Europe recover from the impact of the epidemic, demand continues to recover, and global shipping capacity is in short supply.

2.Insufficient transportation capacity: On-going transportation ships are operating at full capacity, and there is a serious shortage of new shipping ships and transportation capacity. This has led to a significant drop in the idle rate of global container shipping capacity, and the dismantling rate has dropped to close to 0%.

3.Port labor shortage and the impact of the epidemic: Many core ports in economies such as the United States and Europe have experienced labor shortages and reduced operating efficiency. At the same time, due to the recurrence of the epidemic, especially the sharp reduction in the number of seafarers in India and the Philippines, it has affected the release of global shipping capacity.

4.Geopolitical conflicts: For example, the Palestinian-Israeli conflict has led to tensions in the Red Sea, forcing shipping companies to bypass the Cape of Good Hope, increasing shipping distance and costs.

5.Route congestion and diversions: Due to route diversions and port congestion, transportation time and costs are increased, resulting in higher freight rates.

6.Rising fuel prices: Rising fuel costs have led to higher operating costs, and shipping companies have increased freight rates to alleviate cost pressures.

7.Increased environmental regulations and labor costs: Stricter environmental regulations have led shipping companies to invest in cleaner but more costly technologies and operations; at the same time, increased labor costs are also a factor.

8.Market supply and demand: Although supply exceeds demand, shipping companies may strategically raise prices to increase bargaining chips in contract negotiations.

9.Unexpected events: For example, ship detours caused by the Red Sea crisis and other emergencies may stimulate increases in freight rates.

10.The increase in operating costs of shipping companies: including container and vessel loss costs, loading and unloading fees and other surcharges, are also the reasons for the sharp rise in freight prices.

11.Increase in the main contracts of the European Container Line: Due to the continuous increase of shipping companies, disturbances in the geopolitical situation in the Middle East and port congestion caused by route rerouting, the main contract of the European Container Line has increased significantly.

These factors combine to drive up international ocean freight rates. It should be noted that although shipping companies announce price increases, the market supply and demand relationship and actual transaction prices may be different, resulting in differences in market responses to price increases.