LONDON – Spot ocean container rates rose again but at a slower pace, climbing 4% this week. Over the past four weeks, they’ve risen 50%.
reported average spot rates of $4,226 per 40-foot container this week, a number 151% higher than seen the same week last year. Rates are significantly higher (+198%) than they were over 2019’s pre-pandemic average of $1,420.
Rates from Shanghai to New York increased 6% to $6,835 and have now risen 47% in four weeks. Similarly, rates from Shanghai to Los Angeles rose 2%, a 50% increase in four weeks.
Several furniture manufacturers confirmed they’re seeing increases, as well as more difficulty finding availability.
“Growing rates are definitely a concern,” said Rusty Morris, vice president of sales at American Woodcrafters. “I don’t understand why there is such volatility. It’s a world I definitely wish I understood better.
“We haven’t seen them double yet, but we’re probably looking at a 20%-25% increase,” he continued. “The bigger issue for us is finding availability. We haven’t had to change our strategy yet, but we’re keeping a watch.”
Scott Hill, president of sales at New Classic, also said it’s an issue, particularly for those without contracted rates.
“Getting shipments recently is more of a challenge with an increase in cost of overseas freight and a slowdown in production at factories overseas, so we have made a concerted effort to do our best to have our best sellers in stock and on water, albeit having to pay more in some cases to get the goods we need,” he said. “Container customers without contracts are seeing dramatic price increases in freight causing a pushback or delays when we can’t help them with freight.”
Bobby Papazian, partner vice president of sales at Napa Furniture, said it’s a growing concern.
“Oh, they’re absolutely going back up, but they haven’t got to the ridiculous point yet,” he said. “We’re looking at them closely. It happens to everybody though. It isn’t just us.”
“We do both spot rates and contract,” he continued. “But spot rates are better for us because we’re just bringing product into our warehouse. We’re not a retailer. Spot rates are less of an issue for us because we don’t deal in a big fluid influx like retailers do.”
Rates seem to be rising for a variety of reasons, including increased demand from North American importers – who are anticipating inventory needs for the second half of the year – and increasing port congestion. They also could be rising due to increased blank sailings, , as ocean carriers are cutting capacity.
“This increase in blank sailings is driven by the Red Sea crisis,” wrote ocean shipping analyst Sea-Intelligence . “Port congestion is worsening in key hubs in both Asia and Europe. And as was clearly seen during the pandemic, port congestion soaks up supply and leads to potential capacity shortages. As we have said since the start of the Red Sea crisis: There is sufficient capacity to divert vessels around Africa, but not enough additional slack to deal with other major disruptions. Port congestion therefore needs to be brought under control, or spot rates could escalate even further, and quite quickly.”