(Yicai Global) March 17 -- Stronger overseas demand has resulted in a sustained shortage of containers for Chinese exports and a surge in shipping costs for dry bulk cargo since the start of the year, industry insiders told Yicai Global.

“Demand has been strong even in the year's off season, with container shipping capacity still tight after the Spring Festival holiday,” according to Chen Yang, chief editor of Xinde Marine News.

Consumer goods are still in high demand around the world, and the short supply of containers is set to remain a problem at least until the third quarter, Chen said, citing industry forecasts. A more pessimistic prediction is that it will last until next spring.

China-US and China-Europe shipping lines posted a gain of over 400 percent in the average freight rate for containers between the second half of 2020 and this January. Average shipping prices fell about 10 percent from all-time highs after the Chinese New Year holiday, but still remain high overall, said Zhou Shihao, chief executive of international logistics service platform Yunquna.

Sharp Rise

Dry bulk shipping prices soared this year on strong consumption in 2020 and rising demand for raw materials this year, with the Baltic Dry Index, a gauge of freight levels for bulk raw materials, up from 2020's average of 1,066 and 592 in the first quarter of 2020 to 1,579 this quarter. Demand has driven prices.

“In the past, renting a Panamax carrier cost between USD8,000 and USD12,000 each day, but the price has risen to USD20,000 since the start of the year,” said Gao Xuefeng, general manager at Mavega Group China, an international shipping broker that mostly transports commodities such as iron ore, coal and grain.

Small ships carrying dry bulk cargo such as grain posted the biggest increase in freight rates, at least double from a month ago, partly boosted by China's increased grain imports from the US, Brazil and other countries, said Chen at Xinde Marine News.

Business for dry bulk vessels has also been impacted by the tight supply of containers, he noted. In the past, containers with Chinese exports would return to the country laden with grain such as corn, but now they are more likely to soon return empty to relieve the container shortage, Chen added.

Still, the international shipping market is expected to bounce back following the pandemic disruption, Gao said. “Since January, the price of shipping dry bulk goods has been well above last year's peak. The market condition in 2021 is expected to be even better than in 2019.”

Editors: Zhang Yushuo, Tom Litting