Sea Freight Rates 2022
China to the UK – Sea Freight Rate Overview
As we approach Chinese New Year in 2022, importers will usher in the Year of the Tiger along with the hope that the outrageous sea freight rates will start to soften.
Continued disruption in the shipping industry has kept sea freight rates at unprecedented levels. Lack of space on vessels; global port congestion; a shortage of containers on the main routes; dodgy driving through the Suez Canal; and port closures/slowdowns due to Covid restrictions are among the main culprits for the pandemonium.
The graphic (above) shows that the industry was starting to recover in March 2021. Rates were starting to reduce following Chinese New Year in February but the Suez Canal blockage put pay to that. As the shipping lines tried to get vessels back on schedule and reposition their container stock, importers fought for the finite space on vessels. This led to a bidding war to get containers on vessels.
Sea freight rates increased every two weeks or so between April and November 2021. November and December saw some easing of the rates as volumes reduced following the rush to import goods for Christmas sales.
Each year, the lead-up to Chinese New Year sees an increase in the rates. China’s national holiday puts the brakes on most manufacturing for a couple of weeks. Four weeks’ worth of imports are essentially squeezed into two which increases demand dramatically. As expected, we have seen an upward squeeze to rates over the past couple of weeks, but it’s what will happen over the rest of the year that we’re really interested in finding out!
Current and Future Rates
If you’re planning to import (from FOB China to you in the UK) over the coming month or so, you may wish to use the below rates as a guide, however, these could be more or less depending on the exact details:
- 1.0cbm – approx. £550 + UK Duty & VAT
- 2.5cbm – approx. £950 + UK Duty & VAT
- 5.0cbm – approx. £1,700 + UK Duty & VAT
- 10cbm – approx. £3,000 + UK Duty & VAT
- 20ft Container – approx. £8,000 + UK Duty & VAT
- 40ft Container – approx. £13,000 + UK Duty & VAT
We’ve been trying to get hold of Mystic Meg throughout 2022 but she’s been engaged and is still unavailable for comment as to where the rates will be moving forward… so we’ll have to resort to market “intelligence” and a bit of intuition.
The shipping lines are knowingly charging more than they need to and there are two schools of thought surrounding whether there will be reductions or not over the coming months. We, at Shippo, are on the optimistic side of the coin and expect to see reductions over the coming months. However, there is a train of thought where shipping lines will do everything possible to keep the rates as close to the current levels as possible. This could be done by removing capacity (less vessels/services); missing out on previously scheduled ports or altering their schedules or the like. This would be done to ensure demand outstrips supply… and would almost certainly come with a further deterioration of the service quality.
Our Thoughts On Rates
Here at Shippo, we expect to see the rates start to reduce throughout the spring. Historically, there is less volume on the move at this time of year. However, it’s really difficult to know how quickly the rates will drop as the shipping lines will be trying to hold them wherever possible. Another factor is possible port closures in China due to Covid restrictions. We have recently seen a few port closures as they manage the pandemic, and naturally, with port closures come backlogs and an increase in demand that leads to rate increases.
We think it’s likely that it’ll take a couple of years to see the rates settle to their “new normal”. Our current prediction sees the rates snaking their way to around $5,000 per 40ft container by summer 2024 but that’s just our read on the market so we could be wrong. Rates will invariably ebb and flow with various unforeseeable market forces whilst increase during peak season (late-summer/autumn) and before Chinese Holidays before reduce in the spring, but here’s what we currently expect to see as the general trend over the next couple of years:
We know this is just our opinion so can’t be taken as gospel but we really wanted to give you an insight into our thoughts so you can try to plan ahead. We know just how difficult it is to be an importer in the current conditions.
Contact Shippo
We hope this is useful and if you ever want to talk through your shipping plans, the rates, delays or get a market update, please don’t hesitate to contact us or call 0203 3840498.