Sponsored By

Trans-Pacific reefer rates hit 'excruciating' new peak

Reefer rates between the US west coast and Far East rose by almost 60% in April, as typical year-long contracts expired and new ones were negotiated.

Paul Bartlett, Correspondent

May 19, 2022

1 Min Read
20130927 163829
Photo: Lee Hong Liang

According to Xeneta, an ocean and air freight intelligence firm, new contracts spanning 12 months from April 2022 have been agreed at an average of $5,945 per FEU, up from about $3,750 last time round. Patrik Berglund, Xeneta CEO, could not have been clearer in his explanation: “With the escalating cost of energy prices, and the recent strength of the market for ocean freight in general, shippers would have expected some pain at the negotiating table. But this, for many, is going to be excruciating. This is an almighty increase, pushing prices to an all-time high.”

The Xeneta analysis reveals that smart shippers looking to duck the rate rise could do so by switching to shorter contracts. Short three-month deals have been available at lower levels, but spot rates on the trade lane are still averaging $5,050 per container. However, most shippers seek to defer freight risk by locking into longer-term deals to optimise business planning and strategy.

The Xeneta data have been released as the United Nations is in what is described as “intense contact” with Russia, Ukraine and other nations as a global food crisis looms. The war in Ukraine has stopped the export of grain cargoes from both countries that are essential for many regions, notably in Africa and the Middle East. Interrupted supplies of sunflower oil, meanwhile, have driven lumpy price hikes in Europe and elsewhere.

Related:Container freight contracts agreed at high levels despite spot rate easing

The UN Secretary-General, António Guterres, warned of long-term famines across many poorer nations unless grain stocks are released for export on Wednesday. He also said that it was essential that Russian food and fertilisers should have “full and unrestricted access to world markets”.

About the Author

Paul Bartlett

Correspondent

UK-based Paul Bartlett is a maritime journalist and consultant with over four decades of experience in international shipping, including ship leasing, project finance and financial due diligence procedures.

Paul is a former Editor of Seatrade magazine, which later became Seatrade Maritime Review, and has contributed to a range of Seatrade publications over the years including Seatrade’s Green Guide, a publication investigating early developments in maritime sustainability initiatives, and Middle East Workboats and Offshore Marine, focusing on the vibrant market for such vessels across that region.

In 2002, Paul set up PB Marine Consulting Ltd and has worked on a variety of consultancy projects during the last two decades. He has also contributed regular articles on the maritime sector for a range of shipping publications and online services in Europe, Asia, and the US.

Get the latest maritime news, analysis and more delivered to your inbox
Join 12,000+ members of the maritime community

You May Also Like