Cargo Container Shortages Raise Prices

Mexico-Asia maritime freight suffered significant variations throughout 2020. However, ever since September, shipments began registering figures over US$4,082 per 40ft equivalent unit (FEU), 186 percent higher than in the previous month when the price was around US$1,423. In December, prices reached US$6,014, reports T21. The price increase was felt not only in Mexico but globally. FEU prices from China to Europe are now twice from what they were a year ago, reports the Colombian Federation of Logistics Agents in International Commerce (FITAC). During the first fifteen days of December, the international market began trading above US$5,300 to levels of US$6,200 per FEU, reports T21.

Why Have Cargo Prices Increased?

In March 2020, when the world was forced into confinement by the spread of COVID-19, the global economy had to take a big breath. In terms of international trade, the sanitary measures countries implemented had different consequences in international logistics due to a reduction in the number of port workers, the closure of logistics agencies and the reduction of ships available, explains FITAC in a report.

However, in the case of China, the pause was not very long, as factories resumed activities shortly after. The country became the largest supplier of medical equipment. Between March and May 2020, China exported approximately 70.6 billion medical masks, reports FITAC. The problem, the federation explains, is that the international logistics supply chain did not have the capacity to keep up with China’s rhythm.

Shipping limitations and the decrease in exports from the US to China also contributed to a rise in prices. During the first nine months of 2020, container traffic from the US to China decreased by 14 percent, while container traffic from China to the US increased by 12 percent, reports FITAC.

Sustained shortages led dry cargo prices to reach an all-time high of US$6,568 per FEU, reports T21. The Shanghai Containerized Freight Index (SCFI) ended 2020 trading at US$1,658.58 per container, which is a 60 percent increase over the previous year, reported T21. FITAC argues that researchers believe the problem can be solved between February and March 2021, depending on how vaccination goes and the different measures governments implement in the midst of the pandemic.