Container Prices Go Through The Roof As Shippers Make Billions
Container shipping prices have reached record highs with goods in Australia including appliances and consumer electronics set to rise as shipping companies make billions in profits.
A 40-foot shipping container that cost between $3,000 and $4,000 18 months ago is now costing between $8,000 to $10,000 in Australia.
Also impacting pricing is component price rises with several products set to rise as manufacturers pass on price rises.
According to Acer Australia Darren Simmonds “Prices for containers have doubled we are now facing some serious price rises. Last year we were paying around $4,000 a container this is now double”.
Now some 18 months after the outbreak of the coronavirus pandemic which disrupted maritime logistics chains and drove demand sky-high Australian importers are having to fight to get stock onto boats.
“We are basically running out of vessels and of empty containers,” said Alan Murphy, head of the consultancy Sea Intelligence.
“There’s been a massive shortage of empty containers, they are in the wrong place, they are stuck in ports and not in Asia ready to be loaded.”
This has resulted in Australian Companies having to pay for storage in Australia.
Another problem for Australian is the recent Chinese tariffs on wine barley and wheat and meats has seen less containers being turned around from Australian ports.
The Freightos Baltic Index, a benchmark for major shipping routes, has more than tripled in a year to nearly $7,000 for a trip from China to Countries such as the USA and Australia.
A trip from China to Europe has exceeded $10,000, compared with just $1,600 at the same time last year.
Murphy said the unprecedented situation compounded the troubles of the last 10 years, which he said had been “really bad for the shipping lines.”
The COVID-19 pandemic, which initially brought global shipping to a virtual standstill, did not bode well for the industry and led to “an unprecedented drop in demand,” Didier Rabattu, of Lombard Odier Investment Managers Talking told the Japanese Times,
But this did not account for the trends among consumers, who during lockdown stopped spending in restaurants and theatres or going on holiday and instead used their money to purchase material goods — many of them imported from Asia.
“Imagine how many televisions you can buy if you don’t go skiing for a week with four people?” said Paul Tourret, director of France’s Higher Institute of Maritime Economics.
The Japan Times claims that disruptions to loading and unloading operations, from dockers falling ill and COVID-19 restrictions to unforeseen events like the shipping backlog caused the blockage of the Suez Canal in March, have only exacerbated the trend.
As a result, ship owners have never been in better shape.
CMA CGM container and shipping company whose Australian headquarters are in Melbourne posted a net profit of more than $2 billion for the first quarter of 2021 alone, 40 times more than the previous year.
Danish Company AP Moller-Maersk who operate out of Sydney announced an even higher net profit of $2.7 billion for the first three months of the year — 13 times what it saw last year.
“It is true that ship owners are making a lot of money at the moment,” Tourret said.
The price of container transport depends on the level of demand, but also on supply-side capacity to meet it.
“Whether or not ship owners decide to wage a trade war is a major factor,” Tourret said.
“None of them has any interest in driving prices down. Their collective discipline today must be not to sell out,” he added.
Some experts claim that they do not expect things to return to normal before the first quarter of 2022.
One industry executive said, “I think we have reached a peak.”
“If demand continues to rise, there is a not insignificant risk that prices could rise again, but we are more or less at the top of the curve,” he added.