• September 15, 2021

Freight costs jump as shipping rates, insurance premium soar

The sudden surge in container rates and insurance costs following the Russian invasion of Ukraine is expected to drive up freight costs across the world, industry executives and trade associations said. Container rates are up ten-fold in less than a fortnight, while war insurance premiums have risen 5%.

The shipping industry, which plays a major role in global trade, was already fighting a shortage of vessels and containers when American and European sanctions on Russia and its businesses drove up crude prices, increasing shipping costs. On Thursday, Brent crude oil approached a multi-year high of $120 per barrel and was slightly lower at $113 on Friday. On 3 March, the Drewry’s composite world container index was up 2.1% from last week to $9,279.46 per 40ft container.

Anil Devli, CEO of the Indian National Shipowners’ Association (INSA), said daily rates of tankers and vessels have zoomed from $3,000 per day around 10 days ago to $30,000-40,000 now, primarily because there are fewer ships from Russia and Ukraine. He added that war risk premiums for ships have also increased by 3-5%.

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