Inflation Alert! A dive into the Drewry Supply Chain Advisors World Container Index. Does this bottleneck look like the wildcard to everything inflation to you as well?
Drewryโs composite World Container index increased 4.7% or $397 to $8,795.77 per 40ft container.
- The composite index increased 4.7% or $397 this week, and also, remains 333% higher than a year ago.
- The average composite index of the WCI, assessed by Drewry year-to-date, is $5,760 per 40ft container, which is $3,716 higher than the five-year average of $2,044 per 40ft container.
- Drewryโs composite World Container index surged 4.7% or $397 to reach $8,795.77 per 40ft container, which is 333% higher than the same week in 2020. Freight rates from Shanghai โ Genoa and Shanghai โ Rotterdam increased $852 to $592 to reach $12,626 and $12,795 per respectively, a Year-over-Year change of 514% and 596%. Spot rates on Rotterdam โ New York grew 7% or $328 to stand at $5,336 per 40ft box. Similarly, spot rates on Shanghai โ Los Angeles soared $466 to stand at $9,631 for a 40ft container, which is 229% higher than same period in 2020. Likewise, rates on both Rotterdam โ Shanghai and Los Angeles โ Shanghai grew 3% to $1,740 and $1,326 per feu, respectively. Drewry expects rates to increase further in the coming week.
Spot freight rates by major route:
Look at those weekly and annual changes!
The Drewry Multipurpose Time Charter Index tracks one-year period charter rates across a basket of vessel types and sizes and forecasts the market movement over the coming month.
The Drewry Multipurpose Time Charter Index increased to $8,934 per day in June, representing a rise of 7.1% compared to the 4.3% rise seen in the previous month. Drewryโs Index is up 37% since the start of the year and 58% since June 2020. Drewry expects the index to rise a further 5.2% in July to reach $9,400 per day.
Rates across all sectors, including the smaller shortsea vessels, continued to rise over June as strong demand outstripped limited supply. The pent-up demand for manufactured goods and their raw materials, coupled with continued capacity constraints in both the container and bulk carrier sectors, has produced an ever-expanding call for MPV tonnage.
This continued demand uplift is expected to last through 3Q21, although Drewry does think it likely that the rate of growth will slow. For the short-term forecast, they see little to suggest any sudden change in market direction, particularly as most carriers continue to advise that they are fully booked for two months out.
My big takeaway from all of this is even if other sectors are able to ramp up their production, without sufficient cargo to house and move this production, 'phantom' shortages will continue--i.e. manufacturers are stuck with goods produced that they are waiting to move.
For GameStop, I would be very curious to see how Business Continuity Plans have evolved to account for this. However, it is good to know though that they are expanding fulfillment capacity so if they get caught by a deluge of deliveries as things continue to 'normalize' there will be space for it all to go.
