From Claire Jones at FT Alphaville:
Shipping costs are still surging at breakneck speedInflation in carrying cargoes across the world’s oceans now looks much stickier than many hoped.
There’s a blame game going on in global shipping. Everything from games console sales to container locations to competition has been listed as a factor in the rising cost of sailing freight across the world’s oceans.
But a year into the price surge, it’s still proving pretty difficult to assess how much of the disruption is down to demand-related factors, and how much reflects more fundamental supply-side issues.
Despite the easing of lockdowns in the US and Europe, high demand for consumer goods remains a factor. Gene Seroka, head of the Port of LA, told Odd Lots recently that they were still processing more cargoes than ever before.
Shipping has always been a highly cyclical business too. Freight costs between East Asia and the West always tend to rise during the run-up to Christmas, for instance.
However, the evidence that high prices reflect structural issues (and are therefore likely to linger for longer) is mounting. This hit our inboxes earlier today from Xeneta, a firm that provides data on shipping freight rates charged to some of the world’s big exporters:
According to the latest Long-Term XSI® Public Indices, the global index [which measures shipping freight costs on some of the world’s main trade routes] recorded a staggering jump of 28.1% [between June and July], blowing the previous record (a 11.3% rise in May 2019) out the water. The benchmark now stands 78.2% higher than in July 2020, up 76.4% in 2021 alone.
Yep, you read that right. Prices jumped by almost third over the course of a single month and the index is up by more than three quarters over the course of the year so far. For European imports, the picture’s bleaker still with prices jumping by almost 50 per cent on the month, and 120 per cent year-on-year.....
....MUCH MORE
In addition to being an Alphavillain Ms. Jones is editor the the Financial Times' Trade Secrets newsletter, focusing on supply chains, trade, globalisation, logistics, shipping and the politics of same.
