Sea freight spot rates have surged further on the trans-Atlantic trade and routes ex-Asia, as a month of port restrictions, congestion and disruption across south China ports diminishes container shipping’s already severe global capacity and equipment shortages.

Shortages of space and equipment continue, as market demand exceeds supply and rates keep climbing, with blank sailings in June and July compounding the issue. Challenges continue in almost every trade lane, regardless of the continent to which they are destined.

Carriers already have a massive backlog, due to recent disruption and port congestion, which is why they are not able to accommodate their current booking requirements. The issues at Yantian and surrounding ports have created even more disruption, with the resulting omissions and diversions to alternative ports adding to the carriers problems, as they try to rectify their schedules and improve reliability and predictability of container movements.

And following a significant round of general rate increases (GRI) on the 15th June by many shipping lines, there is every expectation that rates will go up further imminently, with Maersk confirming last week that the availability of empty containers in southern China was a mounting problem.

In a customer’s advisory the  Danish carrier highlighted the need for shipper flexibility in selecting equipment. “We see 40’ GP and 40’ HC empty supply is negatively impacted with massive vessel delays and omissions in Yantian and Shekou. Customers are encouraged to amend to 20’ GP as an alternative in Yantian and Shekou.”

Maersk added a note of caution on the reopening of Yantian: “Productivity is gradually set to increase as more workers return and more berths reopen, but the damage has already been done. The current estimated wait is over a fortnight, causing many carriers to divert vessels to other ports.” This creates additional supply chain disruption as a consequence.

Ocean freight spot rates on major East-West trades have seen further significant rises and double-digit percentage rises on transatlantic lanes, with further rises expected this week contributed to by the demand versus supply imbalance.

Continuing strong demand from Asia to Europe saw rates rise further, with average spot rates on Shanghai-Rotterdam gaining a further 7%, over the week, more than seven times their level last year and spot rates on Shanghai-Genoa increasing a further 6%, which is 540% higher than the same period in 2020. To use a maritime phrase its unfathomable where this will lead to next and eventually stop and retreat.

And this is before additional premiums are taken into account in order for cargo owners to get any kind of certainty of their boxes being moved promptly.

With demand outstripping capacity, several sources indicate that the real price to move a box urgently is now around twice the listed publicised index level – with thousands of dollars additionally required per container in the form of premiums and surcharges often necessary just to secure a booking.

Although transpacific freight rates were relatively stable, they have spiked since the disruptions at Yantian began and Asia-US East Coast prices increased nearly 40% last week, with backhaul rates from the US to Asia climbing 30% as capacity tightens and further increases may take hold soon.

Our commercial and operations teams are monitoring the improving Yantian situation and the port congestion that continues across much of Southern China and in many other regions globally.

We remain hopeful that the global situation will begin to improve, but as we enter peak season for container demand uncertainty remains, which is why we will continue to keep you updated as the situation evolves.

Please do continue to send us your forecast data and order information, at the earliest opportunity, so that we can manage cargo bookings and transit deadlines, to meet your expectations.

If you have any questions, concerns, or would like any further information regarding the situation in China, please don’t hesitate to contact Elliot Carlile or Grant Liddell.

Rising shipping rates, sea freight disruption and port congestion, will only come to an end when global consumer demand eases, shipping lines believe. But as demand continues to outstrip supply, shippers are already in for a bumpy and expensive summer, with backlogs of growth and inventory stocking leading to an earlier and longer period of peak pressure for capacity placed on vessel space.

Container shipping is expected to see an extended peak season this year, with no signs of a slowdown in demand and the likelihood that if demand remains strong over the customary third-quarter peak season, it could extend beyond the traditional Golden Week slowdown, which is early in 2022 beginning on 1^st February potentially further exasperating the impact.

BBC NEWS - “We're trying to do the best we can, but this is crippling us”

Illustrating the impact of the current shipping turmoil, the BBC spoke with Scott Humphreys, boss of Peppermill Interiors, which supplies furniture for homes and trade.

Like many importers, Peppermill is feeling the effects of serious bottlenecks in global container shipping, which have led to delays and pushed up prices more than sixfold.

Although it does use suppliers in the UK, roughly half of its stock is imported from East Asia, mainly from China, and it will typically bring in between 200 and 250 containers each year.

The rise in shipping costs is taking a heavy toll on the business, which can't absorb the extra costs and have to pass them.

Illustrating their problem. A single armchair used to cost us £12 to bring in from China. It now costs £100 to import, so the price they have to sell the chair has gone up, but that isn't extra profit and makes the product much more expensive.

And some of cheaper items have doubled in price. So there’s no point bringing them in any more, he said.

Mr Humpherys makes it clear who he blames. "It's all going to the shipping lines. They're working together. It's like a cartel out there.” And while their customers have faced delays in receiving their shipments or struggled to book space aboard vessels at all, the carriers own earnings have not suffered.

Eleven of the biggest carriers made a combined operating profit of $16.2bn in the first three months of 2021, which was significantly more than they generated across the entire second half of last year.

One importer, a housewares supplier, told the BBC consumers were in for a shock over the coming months.

"There's going to be a shortage of products, and prices will be much higher", he said. "We start shipping now to get stocks in for Christmas.

"Prices for houseware, giftware and so on - they'll be going up, maybe as much as 40%."

Demand is still strong, unlikely to change soon and inventories are low, which is why shippers are eager to get their orders on the water, but even when we finally move beyond the pandemic, business will need to increase inventory, so we won’t see the tap turned off, rather than a steadily decreasing demand.

With the global supply chain and logistics market staying strong for an extended period, the current delays, congestion and disruption in the supply chain will remain unless more capacity can be added across all modes of transport. And that’s without the inland domestic issues of driver shortages and other challenges which are being experienced in every corner of the world. It is not unique to The UK.

The lines maintain they have done all they could and can and will be able to do, to add more capacity, with new ships chartered and being built, at very expensive rates, millions of new containers added to their inventory and new vessels on order, but demand is simply outpacing supply.

Metro negotiate rate and volume agreements with a wide range of carriers across all three alliances, which means we can access the widest pool of equipment and offer shippers the biggest range of service offerings, port pairings and rates.

Our fixed validity contracts provide supply chain security and peace of mind, but with space and equipment in such short supply, we recommend a minimum of four weeks visibility and booking window, to secure space on the vessel and get the right equipment positioned.