Why have ocean freight rates increased recently?

The recent surge in ocean freight rates can be attributed to several key factors:

Supply Chain Disruptions:
The COVID-19 pandemic caused major disruptions to global supply chains, including port congestion, container shortages, and shipping delays. These supply chain issues have persisted, leading to a mismatch between supply and demand for shipping capacity.
Surge in Demand:
As the global economy has recovered from the pandemic, there has been a significant increase in consumer demand for goods, resulting in a higher volume of cargo being shipped by sea.
Fuel Costs:
The price of bunker fuel, the primary fuel used by container ships, has risen sharply due to factors such as the Russia-Ukraine conflict and supply chain disruptions. These higher fuel costs are being passed on to shippers through increased freight rates.
Port Congestion and Delays:
Ports around the world have experienced significant congestion and delays due to factors such as labor shortages, COVID-19 restrictions, and infrastructure limitations. These bottlenecks have resulted in longer turnaround times for vessels, increasing the demand for shipping capacity and driving up rates.
Vessel Capacity Constraints:
The global container shipping fleet has faced capacity constraints, with limited availability of vessels and containers. This supply-side constraint has contributed to the rise in freight rates.
Consolidation in the Shipping Industry:
The container shipping industry has seen increased consolidation, with fewer large players controlling a significant portion of the market. This has reduced competition and enabled shipping companies to raise freight rates more easily.
Geopolitical Tensions and Trade Disputes:
Ongoing geopolitical tensions, such as the trade disputes between the United States and China, have also contributed to uncertainties in global trade, affecting shipping patterns and rates.
These factors, combined with the overall recovery in global trade and the lingering effects of the pandemic, have led to a sharp increase in ocean freight rates, which has put pressure on supply chains and logistics costs for businesses around the world.