China plays a major role in rising container prices

The World Container Index, the average price for container transport by sea, from Drewry rose 1,1% this week to $9.408 per forty-foot container. Compared to last year it is a plus of 80%. Also Freightos charges high rates. Prices for container transport on the west coast of Asia and the United States are $12.524 per container and on the east coast it is $16.495 per container. These are respectively pluses of 218% and 232% compared to the same period last year. It is the fifth consecutive week that prices for container transport by sea have risen.

Coronavirus continues to disrupt
China plays a very large role in the current price increases. The Asian superpower has been applying a so-called 'zero covid' policy for a number of weeks. And those policies are starting to affect operations at Ningbo port, analysts say. Area closures and restrictions to contain the spread of the coronavirus in the region are limiting truck access and leading to warehouse closures. In addition, there is fear that the increase in the number of corona cases could limit production in the region.

The above is one of the reasons that transport from Shanghai to Los Angeles increased by 3%, to $10.520 per forty-foot container. Container transport between Shanghai and New York has also become 3% more expensive, to $13.518 per container. The average price on the route from Shanghai to Rotterdam remained stable at $13.658 per container. Prices on these routes are expected to rise further in the coming weeks. This has to do with Chinese New Year. Not only will more orders be placed, many facilities will also stop work that day.

At the same time, the United States – and specifically the ports of Los Angeles and Long Beach – continue to experience congestion problems. The accumulation of ships off the coast is only increasing. And more corona cases as a result of the omikron variant obviously does not help. More and more workers at the port are testing positive and authorities are now bracing for a further slowdown in operations.

Air transport is cheaper
Air transport, on the other hand, has become more attractive again. The Freightos Air Index shows that prices in China and Europe have fallen by 30% since their peak in mid-December. The price now amounts to around $5,68 per kilo. A similar decline is visible for rates in Asia and the west coast of the United States. Analysts do not expect this price drop to continue for long. Stricter quarantine rules are obvious and so is a decrease in passenger travel. Reduced capacity will push prices up again.