- Carriers are charging premiums $2,000-$3,500 over and above FAK.
- Getting space at FAK rates is next to impossible.
- Shippers have to wait for three-five weeks even after paying premium.
A recent news article published in Platts written by Parisha Tyagi reveals that container markets are hot spot. They have to either go premium or go home. This is the new motto in the Asian container markets.
Premiums have risen up
These premiums come on top of the recent runup in container spot freight rates.
It is where the prices to North America from Asia have risen nearly three-fold over the last six months to a record high of $5,300/FEU on Feb. 8.
Container rates to Europe from Asia are also at an all-time high of $8,500/FEU Feb. 8 compared with $1,700/FEU in September 2020.
“The shipping liners are collecting the premium rate for saving the equipment, you cannot get the space without it as it will be impossible to gate,” said Dave Li, branch manager, THI Logistics, Chongqing.
“The probability of you going through is very low without the premium,” he added.
The inside story of premium charges
If the premium is paid, one may get space within 10-15 days.
But if you don’t, you may have to wait really long and nobody can guarantee you a space.
The final cost including priority-loading premium is about $8,000/FEU, compared with the FAK rate of $5,000/FEU.
Premium rates have shifted into the spot market of late due to challenging market conditions.
The premium is meant to ensure a fast-track loading, however, that is not the case anymore.
How does it work?
The concept of premium payment has become a necessity to get space on the container to a level where one pays it as a ticket to get into the queue.
“If you aren’t in the queue, your chance of getting space and equipment is very slim,” Sundara said.
Hot challenges
“Some shippers approach different forwarders, all these forwarders will go to the carriers and carriers will get a lot of bookings. The carriers are also not able to gauge the actual volumes, 10%-15% of total bookings the carriers get may be the fake bookings,” according to Rajput.
The uncertainty around getting a container has given rise to duplicity of bookings.
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Source: Platts
