Ocean Freight Rates Witnessed a Hike by 85.5% in the First Half of 2021

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Sea shipping is undoubtedly one of the most convenient and fastest ways of getting your goods transported to your desired location at the most reasonable prices. However, the rates of ocean freight have raised quite quickly especially after the COVID outbreak and the sudden increase in the demand for freight during the holiday season.

After a continuous increase in the shipping demand and critical negotiation, the price of the freight has increased by 85.5% as compared to the freight rates last year around the same time. The ocean freight benchmarking site mentioned that August witnessed a modest increase in the rates i.e., by 2.2% only. However, the increasing congestion at ports and the high demand for freight during the pre-Christmas period doesn’t make things easier. Container ships are enjoying the benefits by earning maximum financial rewards due to this high freight demand.

Xeneta focuses on the real-time analysis of the sea freight shipping, thus showing comprehensive insights into the current market conditions and how they are influencing freight prices. The increasing demand and inadequate supply have been major factors in these high freight rates. This supply chain disruption along with the COVID pandemic has a tremendous impact on the freight industry.

The CEO of Xeneta mentioned that a 2.2% increase in the freight cost looks normal in 2021, in fact, it is considered pretty modest considering the events that occurred this year. However, if it were a normal year, this would be considered quite beneficial for the carriers. The largest rise took place in the month of July.

The Income Record

The sector showed one of the excellent revenue results, with the figure reaching a profit of $2.8bn in the first half of the year. This number is higher than the total profits accumulated by the Israelis in a period of five years. Research further shows that this high demand is the same in almost every trading corridor and every industry has witnessed a high import and export rate. Take the European international trading business, for example. 

The country reported a rise of 0.5% in imports, while the exports crossed 3.4%. Even though the pace of growth is comparatively lower than other industries, it is still pretty high. The same condition is reported in the United States where imports grew by 2.1% and exports by 0.6%.

The XSI has recorded an increase in the freight price and if you consider the above number, it is pretty clear that the rates are not going to drop in the near future.

Delays in the Freight

Even though there is no guarantee of the same income and demand continuing at the same pace in the coming months, one thing is for sure that the rates are not going to drop anytime soon. If it continues to be the same, the demand is expected to grow exponentially in the coming days. The high demand and congested areas have made things really challenging for the shippers as well as the retailers. The delays in the shipment have been tripled within the first half of 2021 as compared to the same in 2020. You will be surprised to know that the travelling time between Europe and the Far East, i.e., a round trip takes approx. 100 days. The congestion has crowded the vessels at the port, not only leading to extreme delays in the shipment but also causing a lot of tension to the retailers and shippers. Planning the shipment of freight has become super challenging, especially during the peak seasons when the supply is outpaced by the demand. The vessels are stuck in the worst cycle of delays, which do not seem to be getting better soon. 

What has made it even more challenging is the holiday season. With Christmas around the corner, this demand is not going to slow down. With high demand for freight, the vessels will stay tied up at the port thus leading to more delays in the future. Now, these delays will definitely have a severe impact on the already high freight rates. It is high time the industries started understanding this competitive marketplace. It is important to stay up-to-date with the current market conditions to ensure a proper and timely supply of your freight. 

VSL Worldwide Logistics

It has become more important now than ever to choose your freight company wisely. After all, it is your company that decides how long it takes until your shipment reaches the destination. The rates also depend on the company you work with. Whether you need a one-time transfer or a bulk transfer, featuring a large quantity of items, VSL Worldwide Logistics is your one-stop destination for all types of cargo transfer services through the sea.

Also Read – https://vslworldwide.com/blog/the-high-port-pressure-in-the-asian-countries-due-to-the-extended-lockdowns-and-covid-protocols

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