- At present, the Delta mutant virus has accelerated its spread, leading to a slowdown in global container turnover.
- The virus variant has a greater impact on some Asian countries and regions, prompting many countries to cut off seafarers’ land traffic.
- Recently, the epidemic in Vietnam has further spread, with nearly 10,000 new confirmed cases in a single day, and 19 cities continue to be blocked.
- Cat Lai and Vietnam’s New Port Gaimei International Port (TCIT) have notified the suspension of import and export containers.
A recent news article published in the MINNEWS states that soaring 500%!China-US freight rates broke $20,000 and hit a new high, and many shipping companies continued to increase their surcharges!
Pressure on global supply chain
With the arrival of the US shopping season, retailers’ increasing orders have doubled the pressure on the global supply chain.
At present, the container freight rate from China to the US has exceeded US$20,000 per 40-foot container, setting a record high.
Philip Damas, general manager of Drewry, a maritime consulting agency, pointed out that the current global container shipping has become a highly chaotic, under-supply seller’s market; in this market, many shipping companies can charge four to ten times the normal price of freight.
First time in 30 years
Philip Damas said: “We have not seen this in the shipping industry for more than 30 years.” He added that he expects this “extreme freight rate” to continue until the Chinese New Year in 2022.
Recently, the Freightos Baltic Daily Index adjusted its method of tracking ocean freight rates.
For the first time, it included various premium surcharges required for booking, greatly improving the transparency of the actual cost paid by shippers. The latest index currently shows:
- The freight rate of each container on the China-US East route reached US$20,804, a rise of more than 500% over a year ago;
- The China-US West fee is slightly less than US$20,000 ;
- The China – Europe of the latest rate of nearly $ 14,000 .
What did the China Ports Association say
The China Ports Association said that after the epidemic rebounded in some countries, the turnaround time of some major foreign ports slowed to around 7-8 days.
The soaring freight rates have caused the rent of container ships to rise, forcing shipping companies to give priority to providing services on the most profitable routes.
Tan Hua Joo, executive consultant of Alphaliner, a research and consulting firm, said: “Ships can only profit in industries with higher freight rates. This is why the capacity is mainly transferred to the United States.”
Drewry general manager Philip Damas
Drewry general manager Philip Damas said that some carriers have reduced the volume of less profitable routes, such as transatlantic and intra-Asia routes. “This means that the latter’s rates are now rising rapidly.”
Industry experts analyzed that at the beginning of last year, the coronavirus epidemic slammed the global economy on the brakes and triggered disruptions in the global supply chain, which resulted in skyrocketing ocean freight rates.
Jason Chiang, director of Ocean Shipping Consultants, said: “Whenever the market reaches the so-called equilibrium, there will be emergencies that allow shipping companies to increase freight rates.”
Blockage of the Suez Canal in March
He pointed out that the blockage of the Suez Canal in March was also one of the main reasons for shipping companies to increase freight rates.
“The newbuilding orders are almost equivalent to 20% of the existing capacity, but they will have to be put into operation in 2023, so we will not see any significant increase in capacity within two years.”
Maersk, Mediterranean Shipping, CMA CGM launched a levy, and raised a number of surcharges
Recently, the US Federal Maritime Commission FMC issued a notice requiring eight ocean carriers to respond to congestion-related surcharges that they have implemented or announced.
This action was taken in response to a message received by the FMC from “multiple parties” that the carrier improperly implemented the surcharge.
Despite this, it still failed to stop the shipping company from charging surcharges and price increases.
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Source: MINNEWS
