'Monstrous rates' for freight continue to rise due to Covid-19, Brexit and the Suez Canal blockage

Fri 23 Apr 2021
Posted by: William Barns-Graham
Trade News


Air freight costs are “going nuts” with “monstrous rates” affecting routes around the world, according to experts from the logistics industry.

A spike in prices for air cargo travelling towards the US is having a knock-on on global markets, with carriers now following the money to focus on serving routes into the country.

Demand for goods has increased since the relaxation of lockdowns in countries such as the US and UK.

America first

“When the US gets busy, the rest of the world suffers as capacity is absorbed on to higher-rate American lanes,” one forwarder told Loadstar.

Rates from Hong Kong to the US now are closing in on US$12.88 per kilogramme, a Shanghai forwarder said.

UK charters

The UK’s departure from the EU is also having an impact.

Another forwarder told Loadstar that because e-commerce volumes to the UK can no longer travel with EU shipments, they required “multiple charters, on fixed schedule flights from China’s inland cities to Heathrow”.

Dual challenge

Speaking at an Open to Export webinar this week on supply chain resilience, Institute of Export & International Trade customs consultant Nick Blenkinsop pointed out that the pandemic and Brexit had presented businesses with overlapping logistical challenges.

Covid-19 has led to warehouse capacity shortages and a 300% surge in container rates, he said.

At the same time, new customs rules and procedures following Brexit have seen freight flows between the UK and EU become less predictable.

For instance, Blenkinsop pointed out that online deliveries to the UK from the EU plunged by 50.7% in the first quarter of 2021, while exports to the EU slumped by 42% in January.

Exports did, however, rebound by 46% in February.

Suez impact

Asia-Europe ocean rates have also climbed a further 6% following the Suez Canal crisis and are now valued at $7,762 per FEU (forty-foot equivalent unit), according to Freightos data reported in Lloyd’s Loading List

Rates had been falling in February before the canal blockage, but carriers are now bypassing congested ports like Rotterdam to unload at alternative hubs, and this is having a knock-on effect on delivery times and prices.

Container shortage

According to the South China Morning Post, this has had a significant impact on European importers as their goods have required extra shipment between ports.

It has also affected European exporters, who have had bookings rejected by carriers that are prioritising moving empty containers to Asia.

SMCP reports Freightos claims that the one-time shipment cost from Europe to the US – a route which was relatively unaffected by the pandemic last year – has increased 60% since the start of this month and surged 87% since January.