(24 August 2021) As of July 2021, global container freight rates, as measured by the Freightos Baltic Index (FBX), increased fourfold over the last year due to the faster than expected recovery of consumer demand, container shortages, and the shift of consumer spending from services to goods.

  • The global container throughput index by the Institute of Shipping Economics and Logistics, which monitors activity in 82 international ports covering more than 60% of world container handling, increased by 18 points in June year-to-year, and by 10 points from pre-covid levels. 
  • According to the IMF, global import value recovered in about six months, returning to pre-COVID levels by November after dropping sharply in the first half of 2020, and reached a historical high in spring 2021. 
  • High shipping costs may be a factor in increased actual and expected inflation since importers can pass increased freight rates on to customers.

The outsize growth of shipping costs has been attributed primarily to the fact that economies began to recover from the COVID-19 pandemic faster than expected, leaving many ports unprepared for the resurgence in traffic. The shift in consumer spending from services to goods and inventory re-building by businesses added to the upward pressure on shipping prices.

High freight rates resulted in improved performance for some of the largest shipping companies from the United States and East Asia, such as Moller-Maersk and Orient Overseas International, whose share prices increased by 60% and 120% respectively in 2020. At the end of Q1 2021, share prices were up 154% year-over-year for Moller-Maersk and 414% for Orient Overseas. However, analysts from Fitch expect prices to moderate in the medium term due to high competition in the sector, ongoing trade tensions, uncertainty about economic recovery paths, and emission regulations.

Regional analysis shows that the greatest increase in freight rates is associated with China and East Asia:

  • The cost of freight from China and East Asia to Northern Europe and North America has risen 7 times since the beginning of 2020.
  • The cost of shipping to China increased by two to three times.
  • The cost of freight from America to Europe has hardly changed, while the freight rates from Europe to America increased by 1.5 times.

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