- Shipping lines charge more after Ningbo terminal closure disrupts schedules
- Queue at Los Angeles/Long Beach grows to 37 ships at anchor
Premium service fees applied to container freight rates from North Asia to North America escalated further the week ended Aug. 20, even as the quality of priority shipping continued to deteriorate amid severe and worsening port congestion on both sides of the trans-Pacific trade lanes, reports Platts.
Cancelled sailings and missed port calls
Rates including premiums from China to East Coast North America were generally in the $20,000-$25,000/FEU range for loading dates through mid-September, with prompt dates at the higher end of the range.
From Ningbo, rates to the US East Coast were heard by a shipper at $20,302/FEU and $24,745/FEU as the Chinese port complex was experiencing heavy congestion since its Meishan Island terminal was closed one week ago after a worker tested positive for COVID-19.
A US-based freight forwarder counted 37 cancelled sailings or missed port calls stemming from the Ningbo terminal closure, with some services calling at Shanghai instead while others were skipping the Huangzhou Bay region altogether. An offer on the spot market at $15,800/FEU from Shanghai to the US West Coast would probably escalate to around $17,000-$19,000/FEU to actually book the space, the freight forwarder said.
“The Ningbo port issues and the ongoing congestion crisis are only going to permeate further in premium rates,” the freight forwarder said. “I don’t see it going past $30,000/FEU on a port-to-port basis for the trans-Pacific, but rates will keep on moving up the ladder.”
Another US-based freight forwarder said congestion at the Los Angeles-Long Beach port complex is even more worrying to shippers because there are at least more terminal options for exporting from East China.
The number of vessels at anchor in the San Pedro Bay grew to a queue of 37 containerships on Aug. 20, some of which have been waiting there more than a week. Cargoes often spend additional weeks sitting at the port before getting loaded onto railways for transport to inland destinations, despite the fees paid for premium services.
“Los Angeles looks like it’s facing an invasion force,” the freight forwarder said. “There is an armada just sitting there off the coast. The problem is that some people are paying $30,000/FEU for an IPI booking and no one call tell them when their stuff is going to show up.”
Premium rates from Southeast Asia move higher
Premium rates for container shipments from Southeast Asia to North America inched up during the week ended Aug. 20 as equipment availability shrunk and shippers grew desperate to secure space.
Prices for Southeast Asia to East Coast North America were heard in the $19,000-$25,600/FEU range, with the upper end $600/FEU higher than a week ago. For West Coast North America, priced ranged between $17,000/FEU and $21,000/FEU against the top limit of $20,000/FEU one week ago.
“Many carriers have extended the FAK rates to the end of the month, but they have effected the increase in the premium rates,” a source based in Hong Kong said. “Shippers are ready to pay any price, but they want equipment.”
Equipment availability is declining as supply chain constraints and port congestion around the world prevent the smooth rotation of empty containers, sources said.
While the phased reopening of Meishan Island container terminal at Ningbo has begun, the situation there kept shippers at tenterhooks throughout the week. Lockdown restrictions and curtailed port operations in Vietnam added to concerns about backlogs and pileups.
“The government [has] shut down exporting factories which have been operational for majority of the pandemic times. That is causing chaos in Vietnam,” a US-based importer said. “Every closure creates delayed goods from arriving and departing, which in turn creates blank sailings causing less supply, more demand allowing the carriers to increase rates even more.”
The continual struggle for equipment and rate hikes on ex-China long haul routes left other markets in Asia more deprived of capacity, making premiums more robust.
“I managed to get a shipment for Australia today, after struggling for one month, at $5,500/FEU, which is more than three-times what we paid a year ago” a freight forwarder based in India said. “Despite paying a premium fee, there is no guarantee of a timely delivery and the carrier has already warned us of delays in transshipment.”
Rates for China to India are hovering at $4,000/FEU after having while it barely touched $1,000/FEU before the coronavirus pandemic, another freight forwarder said.
Premiums a growing possibility for European importers
For operators on Asia-to-Europe trade lanes, all eyes remain fixed on Ningbo, with the market squarely in wait-and-see mode as carriers divert operations to other ports in the area.
Premiums remain the exception to the rule but, should the issues in the North Asian market worsen, there are some expectations that the Asia Westbound market will experience the same increased activity on the premium side that the trans-Pacific lanes have seen in recent weeks and months.
Market sentiment remained in the doldrums over the course of the week.
“There are endless issues in this market, that is the one thing you can be sure about,” said a NVOCC source. “As soon as one clears, people get optimistic, then the next issue comes along and people are surprised and the mood sours again.”
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Source: Platts
