Reefer rates between the US west coast and Far East rose by almost 60% in April, as typical year-long contracts expired and new ones were negotiated.

According to Xeneta, an ocean and air freight intelligence firm, new contracts spanning 12 months from April 2022 have been agreed at an average of $5,945 per FEU, up from about $3,750 last time round. Patrik Berglund, Xeneta CEO, could not have been clearer in his explanation: “With the escalating cost of energy prices, and the recent strength of the market for ocean freight in general, shippers would have expected some pain at the negotiating table. But this, for many, is going to be excruciating. This is an almighty increase, pushing prices to an all-time high.”

The Xeneta analysis reveals that smart shippers looking to duck the rate rise could do so by switching to shorter contracts. Short three-month deals have been available at lower levels, but spot rates on the trade lane are still averaging $5,050 per container. However, most shippers seek to defer freight risk by locking into longer-term deals to optimise business planning and strategy.

The Xeneta data have been released as the United Nations is in what is described as “intense contact” with Russia, Ukraine and other nations as a global food crisis looms. The war in Ukraine has stopped the export of grain cargoes from both countries that are essential for many regions, notably in Africa and the Middle East. Interrupted supplies of sunflower oil, meanwhile, have driven lumpy price hikes in Europe and elsewhere.

The UN Secretary-General, António Guterres, warned of long-term famines across many poorer nations unless grain stocks are released for export on Wednesday. He also said that it was essential that Russian food and fertilisers should have “full and unrestricted access to world markets”.

Source: Seatrade Maritime News