Any Excuse To Make Larger Profits - Shipping Companies Out Of Control

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I am involved with logistics and have always taken a close eye on container costs due to them being a set price for so many years and then suddenly spiking and fluctuating like a volatile asset. This like most things has been manipulated and taken advantage of at the cost of the consumer whilst benefitting a few.

Roughly 90% of the East West shipping trade is sailing around the Cape Of Good Hope bypassing the short cut through the Suez Canal. The reasons for this are conflicts in the Red Sea with the Houthis (190 reported vessel attacks since 2023) having added an estimated $500K to a voyage insurance bill. If you then throw in the cost of transiting the Suez Canal fee which is around $200K then that route has a cost of around $700K besides fuel, crew and leased containers. The Cape route has an estimated $1 million added cost in fuel and time due to it adding 7-14 days to the voyage.

The Cape does not really see any benefits from the extra shipping in the area due to vessels today having enough fuel and provisions to navigate the extended trip non stop. The Cape back in the day was a stopping point to resupply with fuel and provisions. The only vessels stopping today would be those in need of assistance with mechanical issues or replacement parts.

This tells us the trip is costing an additional $300K which would have increased with fuel prices having increased recently. Even if the costs have increased by another $500K that would put the difference at around $800K. A large container ship carries somewhere between 20K and 24K containers so if one crunches the numbers that is an additional $33.30 per container so why the heck have the containers increased by $1000's of dollars over the last year? The answer is very simple and it is greed by the shipping companies and total ignorance by those customers using them. This is a controlled monopoly/cartel by the shipping companies and we are all being played for fools.

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Shipping is actually quite interesting as there are so many different factors in play and not just the booking of a container on a vessel. The containers have to be spot bid in bulk and collected by the various shipping companies which basically pays for their return voyage taking the empties home. The chart above shoes us the current container rate on the open market is $1890.77 which is up 35% over the last 12 months. Not as bad as the covid lockdown period which saw this rate exceed $5K. This price was driven through scarcity as more exports went to the US and the ports were backlogged tying up the container liquidity stock.

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The questions that one should be asking is why have the prices of a container being delivered increased by as much as 350% prior to the covid lock downs. We are not talking decades here and this is since 2019 so only 7 years.

2019 prices were between $1400 and $2500 on major routes peaking in 2021-2022 to around $10K - $20K. This was fueled by shortages of containers and vessels backed up in US ports. A container from Shanghai to Rotterdam will cost you around $7000 today with the shipping rate around $2200. The opposite direction of Rotterdam to Shanghai which will mostly be empties returning to reload is only $599. Somewhere somehow the costs do not align with the figures and if you add the 3 together which you normally would not do there is $3000 being added on top of these shipping charges.

Just this week one shipping company added an extra $850 cost for bunkering fuel per container. This goes into effect from the 1st May and expect others to follow suit as this is a perfect excuse to make extra profits. If you do the sums that is an extra $20.4 million made on top of the voyage that is only costing in the region of $3 million up from $2 million with the new prices. In other words they just made an extra $19.4 million per trip per vessel and each vessel does an average of 6 trips to Europe from the East so a cool $115 million extra profit per vessel per year.

We the consumer are paying for the shipping companies greed and there is no need for this if everyone used common sense understanding these additional costs are all fake and are all being manipulated. How can you turn an extra expense of fuel costing $33.30 per container into $850 as this is criminal and is simple exploitation. One voyage will be netting the shipping company in the region of $100-$150 million per trip which is anywhere between 3-5 times more profit than back in 2019. This impacts inflation globally through vastly increased prices to the consumers.

Just to give an indication of how profitable the top 10 shipping companies have been lately from 2019-2023 they made over $340 billion in profits and only paid an average 9.7% in taxes. The good times are certainly being kept high with their continuous profiteering through 2026 and without controls will continue to do so.

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