Prolonged turnaround times at Chinese ports and congestion at US and UK centres are driving up container rates
Container prices at major Indian ports jumped 10-15 percent in January from a month ago as the spread of the Omicron variant of the coronavirus disrupted global supply chains.
The average price of a 20-foot dry container at Chennai port rose to about $2,100 (Rs 1,55,316) in the first week of January from about $1,880 in December, shipping companies told Moneycontrol.
The average price of a 20-ft dry container in Mundra climbed to $1,950 in the first week of January from $1,763 in December. At Nhava Sheva in Navi Mumbai, the average was $1,900 against $1,775 in December, market officials told Moneycontrol.
The price of a 40-ft dry container at Chennai increased to $5,100 from $4,780 in December. At Mundra and Nhava Sheva, the prices rose to $4,900 and $4,850, respectively, from $4,650 and $4,600, respectively, in December, they said. The rise in container rates was on account of various factors, including widespread restocking by retailers in China ahead of the Lunar New Year starting February 1 and the country’s rising Covid-19 cases.
“Container turnaround times at major ports in China are once again on the rise due to bottlenecks ports are facing because of rising Covid cases and logistical bottlenecks,” an official from Container xChange said.
Suspension of trucking activities in several parts of China, coupled with strict control on trucks moving goods in many districts, has slowed the movement of containers in major Chinese ports, Bloomberg said in a report last week.
US, UK congestion
Apart from the prolonged turnaround time for containers in China, ports in the US and the UK are experiencing severe congestion.
“Until congestion at major ports in the US and the UK is cleared, there will continue to be a major imbalance in the supply and demand of both vessel capacity and containers. As the Omicron variant brings more disruption, with the Chinese New Year around the corner and some ports, including Ningbo, already facing lockdowns, we are expecting a volatile start to the year for ocean freight logistics,” Jefferies Equity Research said in a report earlier this week.
AP Moller-Maersk, one of the world’s biggest container shipping companies, told its customers last week that 2022 had not started off as “we had hoped”.
“The pandemic is still going strong and unfortunately, we are seeing new outbreaks impacting our ability to move your cargo. The situation is particularly challenging at several hub ports and gateway terminals,” the Maersk said in a statement.
Additionally, a rise in Indian exports also led to an increase in spot container freight rates at major ports in the country, experts said.
“Many companies are likely to get into bidding wars to extradite their export and import cargoes and this is likely to lead to higher tariffs,” a Mumbai-based shipping analyst said.
India’s exports increased 33 percent to $7.63 billion during January 1-7 on account of healthy sales of engineering goods, petroleum, and gems and jewellery, according to preliminary data from the commerce ministry.
“Trading volumes have risen in the past two months and they are expected to remain high for the next few months as a number of companies look to supply the pent-up demand in other countries,” another Mumbai-based shipping analyst said.
Demand for Indian merchandise and gems and jewellery has risen in the past few months, shipping companies said. Demand for white goods has also picked up, they said.