Freight Charges Stabilize after Energy Crisis Induced Turmoil, Still at Record Levels for Several Routes

Freight charges, worldwide, have shifted balance after a prolong period of upheaval which was mainly caused by global energy crisis and shipping container misplacement. Though, there is some recent stabilization in freight charges and shipping costs however market participants will not have much of a reprieve as freight charges on several important routes remain on the elevated levels, manyfold higher than yearly average.

Among the key trading routes around the world, freight charges on East Asia/China to North America East Coast route were assessed at USD 16,700 in the first week of December dipping from USD 20,200 in October for a 40’ container (FEU). Transpacific voyages will also charge less for the market participants as freight declined from USD 18,100 in October to under USD 15000 in December for the above container size.

Chemical and petrochemical industry has been among the worst hit which as they depend largely on international tradeoffs, via sea routes or air travels. North American region suffered with spiked prices for several chemical and resins because of unavailability of imports from over supplied Asia to USA and other countries. Among resins, polypropylene (PP) resin prices remained elevated and in excess of USD 2000 per MT for a major part of the year on FOB basis while middle east, top exporter of PP, dealt with production surplus.

Shipping industry entered the year with some volatility however unprecedented weather conditions coupled with global health crisis and then energy crunch around the world meant freight charges worsened over the course of the year.

What is common among the water pipes, expiration date on the passports and freight charges? They come to notice when they go wrong and when they go wrong, they go spectacularly wrong. After a tumultuous 2021 for the shipping industry, now the important question that beckons the market participants is, will 2022 be a different year for the shipping industry?

As per ChemAnalyst, “the performance of the shipping industry has improved in the last few weeks and will consolidate on the gained momentum in the recent past. Global trading is likely to ease in the upcoming year with competitive freight charges and ample availability of the shipping containers. However, this nascent recovery can go southwards if energy crisis struck the world again.”