Container Shipping Prices Have Now Quadrupled Compared to 2020 as Delays Become the New Norm
In February, we reported that the average cost to ship a cargo container had risen 80% since just three months prior. That rate put it at triple the cost compared to the start of 2020.
Now that rate compared to 2020 has more than quadrupled, as Drewry Shipping Consultants Ltd. rated the price to ship a 40-foot container at $8,399. That’s a 53.5% increase from the first week of May 2021 alone.
That number can reach as high as $12,000 per container when shipping from China to major European and West Coast ports, and some companies reportedly have been charged $20,000 for “last-minute agreements to get goods onto outbound vessels.”
Brian Bourke, chief growth strategist for freight forwarder Seko Logistics, called international shipping “the hottest restaurant in town,” in an interview with the Wall Street Journal.
“If you want to get a reservation, you need to plan it out two months in advance,” he said. “Everyone’s trying to grab any spot they can and they’re all spoken for.”
The shipping cost spike is a result of a perfect storm of factors. In the U.S., retailers are trying to keep up with demand that spiked in the middle of 2020 and continued to climb. Add to that issues like the Suez Canal blockage in March and ongoing COVID-related delays at major ports in Southern California and China.
Slower shipping and higher costs will likely be the norm for a while. Danish shipping research group Sea-Intelligence ApS reported that 695 ships were more than a week late to their West Coast destinations in January through May of this year. The Wall Street Journal noted that a total of 1,535 ships arrived late in that window from 2012 to 2020.
Basically, every aspect of the shipping process is gummed up.
“Shippers are desperate to book tomorrow,” Philip Damas, head of the supply chain advisors practice at Drewry, told WSJ. “It’s more a bidding war than it is a traditional tariff, and this bidding war is accelerating. Some of these $23,000 to $24,000 prices include the inland distribution cost and that can easily add far more to the final cost.”
With prices on the rise, promo suppliers and distributors will increasingly need to pass costs on to their customers. And with supply chain issues now looking like they won't ease up by the end of the year as originally expected, it's a good idea to advise customers to begin planning for end-of-year holiday orders early.