Cargo shippers could see some rate relief around summer as bottlenecks at ports caused by the pandemic ease and companies add more boxes.
Shipping firms such as HMM Co. are ordering more containers to fix an acute shortage, with cargo stuck at warehouses longer than usual due to lockdowns and movement restrictions due to Covid. That’s why Port of Los Angeles is trying to get its workers vaccinated, Executive Director Gene Seroka said in an interview with Bloomberg TV on Wednesday.
Spot rates on key trade lanes jumped to records last month with more vessels than usual stuck at ports and a dearth of containers for exporters to ship their goods. Trade associations in China and other organizations around the world have sounded the alarm bell.
“I’m very aware of the fact that the regulators are watching us and if required, there could be intervention,” Shipping Corp. of India Chairwoman Harjeet Kaur Joshi said in an interview with Bloomberg TV, without elaborating.
Weekly spot rates from Shanghai to Los Angeles rose to a record $4,194 per 40-foot container on Jan. 7, while those from the Asian hub to Rotterdam surged to $9,066 on Jan. 21, according to the Drewry World Container Index.
The bottlenecks at ports and tight supply of containers have incurred “considerable extra cost” and it’s inevitable shipping rates will go up, said Jeremy Nixon, chief executive officer of Ocean Network Express Pte.
The higher rates have however helped to boost earnings at some shipping companies, many of which have been posting losses for years because capacity exceeded demand.
A.P. Moller-Maersk A/S, the world’s largest container carrier, said Wednesday it expects profit to grow as much 27% this year after freight rates jumped to a record. HMM, South Korea’s biggest shipping line, reported its first annual operating profit in 10 years in 2020.
The shipping industry could still face challenges over the next three to four months but “hopefully in the summer, we can get back to what we call a steady operation and get our ships back on schedule and get our customers handled much more efficiently,” Nixon said.