London – Container shipping prices hit record highs some 18 months after the outbreak of the coronavirus pandemic which disrupted shipping supply chains and spiked demand.

“We are essentially short of empty ships and containers,” said Alan Murphy, director of the consultancy firm Sea Intelligence.

“There has been a massive shortage of empty containers, they are in the wrong place, they are stuck in ports and not in Asia ready to be loaded. “

The Freightos Baltic Index, a benchmark for major shipping routes, has more than tripled in one year to nearly $ 7,000 for a trip from China to the west coast of the United States.

A trip to Europe exceeded $ 10,000, compared to just $ 1,600 at the same time last year.

Murphy said the unprecedented situation had compounded the problems of the past 10 years, which he said had been “really bad for the shipping lines”.

Overwhelmed by the industry’s overcapacity, he said companies “lose money every time they move a container.”

“The unprecedented fall”

The COVID-19 pandemic, which initially practically crippled global shipping, did not bode well for the sector and resulted in “an unprecedented drop in demand,” said Didier Rabattu, of Lombard Odier Investment Managers .

But that ignored trends among American and European consumers, who during the lockdown stopped spending in restaurants and theaters or going on vacations and instead used their money to buy physical goods – many of them. are imported from Asia.

“Imagine how many TVs you can buy if you don’t ski for a week with four people? »Declared Paul Tourret, director of the Higher Institute of Maritime Economy of France (ISEMAR).

Disruptions to loading and unloading operations, dockworkers falling ill, and COVID-19-related restrictions to unforeseen events like the backlog of shipments that caused the Suez Canal to be blocked in March, have only exacerbated the situation. trend.

As a result, the shipowners have never been in better shape.

The Marseille container and shipping company CMA CGM, for example, posted a net profit of more than $ 2 billion for the first quarter of 2021 alone, 40 times more than the previous year.

Its Danish competitor AP Moller-Maersk reported an even higher net profit of $ 2.7 billion for the first three months of the year, 13 times that of last year.

‘Reached a peak’

“It is true that the shipowners are making a lot of money right now,” said Tourret.

“But it is also a way for them to renew their fleets and accelerate their liquefied natural gas (LNG) programs,” he added.

CMA CGM placed an order in April for 22 container ships, more than half of which are LNG.

Maritime transport is “one of the main emitters of sulfur dioxide”, said the French expert, adding that while the figures were favorable for each tonne transported, the sector nevertheless emitted levels of carbon dioxide “comparable to the ‘Germany”.

The price of container transport depends on the level of demand, but also on the capacity of the supply to meet it.

“Whether or not the ship owners decide to wage a trade war is a major factor,” Tourret said.

“None of them has an interest in lowering prices. Their collective discipline today must be not to sell, ”he added.

The situation could last, said Tourret, motivated in part by the need to transport perishable goods.

“If you’re carrying perishable goods that won’t be worth anything if they don’t move, how much are you willing to pay?” ” He asked.

Jean-Marc Lacave, the director general of France’s maritime service professionals body, Armateurs de France, said he did not expect a return to normal until the first quarter of 2022.

“I think we have reached a peak,” he said. “If demand continues to increase, there is a significant risk that prices will go up, but we are more or less at the top of the curve,” he added.