Stubbornly high shipping expenses for businesses are getting sealed into contracts for the next 12 months, forcing companies to pass the extra costs on to consumers.
The price for a container of goods from China to the U.S. West Coast and European ports has hovered near record highs for several months, and conditions are ripe for more increases even though spot rates usually soften this time of year. What’s more, new contracts being signed by some of the biggest U.S. importers indicate the spike won’t be a short-term blip.
Most large retailers and manufacturers sign annual deals with the ocean carriers to lock in their container freight rates, in private negotiations that typically take place this time each year.
Along the bellwether trade lane linking Asia with North America, contract rates in recent weeks are coming in around $2,500 to $3,000 for a 40-foot container — 25% to 50% higher than a year ago, according to George Griffiths, an editor on the global container freight-pricing team at S&P Global Platts.
“That’s showing that people are expecting this to continue, that they’re not expecting rates to come down any time soon,” Griffiths said. The container carriers “are going into this in a significant position of strength,” he said.