Why Ocean Freight Rates and Activity Are at Historic Highs Right Now

Updated: May 19

By Sourcing Journal

This article was published in Sourcing Journal May 6, 2021. We're sharing because it points to supply chain disruptions caused by Covid-19, specifically related to the freight container shortages and rising freight rates (something we covered in the last issue of Behind the Seams). Maersk, the world’s largest container shipping carrier, shared expectations of a gradual decline in freight rates by the end of the year, as covered in Bloomberg.

Volatility persists in the container shipping market, with carrier freight rates and profitability pointing up, but risks remain that could shorten the up cycle, analysts said in a Thursday Drewry webinar.

Simon Heaney, senior manager of container research at the independent maritime research consultancy, said pandemic-driven supply chain disruption continues to roil the market. He cited, for example, the ongoing bottleneck at the Port of Los Angeles, where the average delays for container ships processing through the docks have been stuck at more than a week since March and are only now starting to ease to a more manageable six-day delay.

A separate report from Richard Thompson, international director of supply chain and logistics solutions at JLL, said ocean carriers have been deploying more and larger vessels from China to the twin ports of Los Angeles-Long Beach, and the incoming volume has been overwhelming.

“Since November 2020, there have been at any time 20 to 40 container vessels anchored outside the SoCal ports, waiting for a berth as long as 10 days waiting for anyone of 13 terminals,” Thompson wrote. “Shortages of workers due to Covid-19, truck chassis, railcars and container boxes exasperate the situation.”

He noted that ocean carriers have started to deploy or re-route more vesse