Facility delays were the top factor identified by carriers as impacting driver's ability to comply with hours of service regulations. The majority of drivers reported to ATRI that they had run out of available hours while being delayed at a customer facility.
Prices are being driven by a commodity boom, high demand for shipping and congestions at ports as parts of the world economy recover from the pandemic. But if inflation becomes a problem, governments could raise interest rates and that could turn the business cycle and shipping cycle around, one analyst said.
After congestion eases and capacity returns to the market, Jensen predicts that “freight rates will come down substantially from where they are today, but they're not going back to anywhere near where they were pre-pandemic.
The rise of global imbalances in the locking down of countries at various times, production, and demand, in addition to the increased demand and limited capacity of shipping companies due to the pandemic, has pushed up the shipping prices to new heights.
Wondering why freight rates are so high? Many factors are contributing to rising freight prices. Tight truck capacity, an ongoing driver shortage, rising fuel prices, and industry-wide struggles to recover from the COVID-19 pandemic are driving shipping costs through the roof.
While crude oil prices were hovering around US$ 35 per barrel until recently, they are currently, more than US$ 55 per barrel. Secondly, surging demand for goods and shortage of empty containers is another reason for distribution going haywire which has in turn caused freight rates to rise so significantly.
Container shipping rates from China to USA
| Port of loading: | Container size: | Shipping price: |
|---|
| Ship a container from China to Providence | 40FT Container | from: $6500 |
| Ship a container from China to Seattle | 40FT Container | from: $4800 |
| Ship a container from China to Chicago | 40FT Container | from: $7800 |
Freight Costs from China to the USAAir Express from China to the US: $5 to $9 per kilo. Air Freight from China to the US: $4 to $8 per kilo. Sea Freight from China to the US: $3000-$3900 per container.
Shipping rates are going up faster than they have in nearly a decade, increasing pressure on merchants to raise prices or find other ways to offset higher costs.
Economic growth and freight rates are expected to remain solid well into 2022, according to transportation analysis firm FTR, but the struggle to find drivers is expected to continue to plague the industry.
Ocean freight rates continue to set new highs in 2021The freight rates in August reached $10,174/FEU, an increase of 466% on the previous year. Also, the charter prices for container vessels have risen fourfold compared to last August, according to the Freightos Baltic Index (FBX).
Suppliers began imposing rate increases in several trade markets in April and carriers are seeking to lock in profits into 2022 via higher annual contract rates signed this year. As a result, don't expect to see rate reductions starting until Q1, 2022, and anything approaching pre-COVID pricing until 2023.
