Global trade continues to take blow after blow in its battle against Covid-19, which is causing freight costs to maintain their upward surge. Trans-Atlantic spot rates have catapulted nearly 66 percent year-over-year as container carriers capitalize on the sustained demand by introducing substantial rate increases.
Meanwhile, demand from EU and US importers remains elevated as freight schedules continue to be thrown off target by external factors. Schedule reliability had already fallen to an abysmal 23.9 percent in February, markedly off last year’s schedule reliability of 57 percent and this was before the Suez Canal was blocked for 6.5 days.
Continued rises in spot rates are anticipated as delays and congestion from the Suez incident continue to impact ship schedules.
Suez Canal Blockage Ripple Effects
The Ever Given was blown off course in late March, resulting in the ship becoming grounded and wedged diagonally in Egypt’s Suez Canal for nearly an entire week. During this time, over 400 other vessels were prevented from passing through this essential global trade passage that sees roughly 12% of all global cargo.
In the best of times, this incident would cause plenty of disruption on its own. Previously bottlenecked ports resulting from increased importer demand have become packed to the gills with the sudden release of the ships that were blocked from passing through the Suez Canal. Ship schedules have been thrown into disarray as a result of the combination of these factors.
US Import Volume and Demand Remains Strong
Despite these setbacks, US import volume remains strong with a one percent year-over-year growth in February of this year. Demand is expected to remain high as US manufacturers seek to fulfill new orders while taking on their enormous backlog caused by supply chain delays.
Shippers may expect further delays and rate increases as the global shipping industry continues adapting and recovering from these setbacks. Contact the experts at ClearFreight to hear our supply chain solutions designed to help you navigate the troubled waters of global logistics.