Prime Freight’s summary of an October 2021 report by FreightWaves. Read the original for the full story.
In October 2021 FreightWaves argued that ocean shipping had become far more expensive than freight rates alone showed, because shippers were paying record prices for the worst service on record.
Drewry expected global container rates to average 126% more in 2021 than in 2020, transpacific contract rates had roughly doubled, and Asia–US West Coast spot rates were about 4.5 times their level a year earlier. Meanwhile Sea-Intelligence put global schedule reliability at 33.6% in August, an all-time low.
The article borrowed the idea of “shadow inflation”, paying as much or more for a worse product, and suggested measuring it through inventory carrying costs, since every day cargo spends at sea ties up capital and raises the risk of stock-outs. A Michigan State University supply chain professor explained that delays hurt high-value cargo most, while rate rises hurt low-value cargo most. Sea-Intelligence estimated that for a small spot shipper of low-value goods, freight had risen to more than half the value of the cargo.
What it meant for shippers
The real cost of a shipment includes time as well as freight. For production components, seasonal goods or high-value cargo, a delay can cost more than the rate increase itself, which is why reliability and transit time matter alongside price when choosing a routing.