Shipping costs have surged 201%, nearing the peak of the 2021 crisis, further fueling inflation.

Global shipping costs are experiencing another severe shock. Container freight rates have surged by 201%, approaching the historical peak during the container shortage crisis of 2021. At the same time, geopolitical turmoil has driven tanker charter rates to unprecedented levels, putting renewed pressure on global supply chains and raising inflation risks.

In a research note last Saturday, Bank of America retail analyst Lorraine Hutchinson warned that ocean freight rates have jumped 201%, approaching the peak increase of 250% seen during the container shortage in 2021. Meanwhile, the average price of diesel across the U.S. is near $6.50 per gallon, significantly squeezing the profit margins of road transporters and driving up inland freight rates. Hutchinson stated, "Most contracts were locked in with prices in the spring, but we are closely monitoring companies using spot freight rates, which could be a potential headwind in 2027."

According to data from shipbroker Gibson cited by ShippingChina.com, the escalating geopolitical tensions in the Strait of Hormuz and the Bab el-Mandeb Strait have driven VLCC (Very Large Crude Carrier) charter rates to unprecedented levels, with daily rates on the TD3C route exceeding $1.24 million. Analysts point out that if these pressures continue into the autumn and winter seasons, higher transportation costs will further intensify inflationary pressures, compress corporate profits, and drag down overall economic growth.

Both the container and dry bulk markets are under pressure.

Specifically, according to shipping industry news, on September 18th, data from the Baltic Exchange showed that daily charter rates for VLCCs on the TD3C route had surged to US$1,241,097. In the Atlantic market, the average daily TCE for the West Africa-China route (TD15) was approximately US$527,477. The average daily TCE for the US Gulf-China route (TD22) was approximately US$400,265.

Container freight rates are not rising in isolation. The Baltic Dry Index, which tracks freight rates for various vessel types, has risen to its highest level since December 2023, covering Capesize, Panamax, and Supramax vessels.

Analysts at shipping analysis firm Thurlestone Shipping characterized the current situation as a "perfect storm," pointing out that the combined effect of tightening vessel supply and a surge in demand from the two major ocean basins is the core driving force behind this round of sharp freight rate increases.

The twin straits predicament exacerbates energy transportation risks.

Global energy transportation is currently facing a severe situation of being "choked by two straits." Regarding the Strait of Hormuz, although the amount of crude oil passing through the strait has rebounded from its spring lows, it is still far below pre-conflict levels, and many ships are using "covert navigation" with AIS turned off, making it difficult to accurately track the actual flow.

In the Bab el-Mandeb Strait, the conflict between the Houthi rebels and Saudi Arabia continues to escalate. On September 19, the Houthis issued a statement claiming that they had launched military operations against "sensitive targets" in the Saudi capital Riyadh and Saudi Aramco's facilities in Yanbu, using a large number of ballistic missiles, cruise missiles, and drones, and stated that they would continue to adopt a strategy of "responding to blockade with blockade and responding to escalation with escalation."

Saudi Aramco has notified at least two European refining customers that it will be unable to fulfill its contractual crude oil delivery obligations next month due to attacks on key east-west oil pipelines leading to the Red Sea.

Analysts warn that if the current freight rate shock continues, it will carry the current transportation cost pressures into the 2027 contract negotiation cycle. Companies will face higher transportation costs and greater pressure to pass on these costs to consumers, which will have a substantial impact on the inflation path.

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