Container freight rates trending upward

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Container freight rates are back on the rise, but even at their elevated levels they mask the true cost of shipping.

For example, the Northern European component of the Freightos Baltic Index (FBX) is up 6% this week to $7,791 per 40 feet, a whopping 450% increase over the rate a year ago, but unlikely to change the minds of shippers who can easily fill ships with containers by paying double that rate.

A leading UK NVOCC has shown The Loadstar its “best” FAK rate offers for May from China to the UK, where space is still available, as $13,500 for 40 feet – and that’s before surcharges are added.

And this isn’t just a problem for shippers in the Asia-Europe trade, it’s the same on the transpacific, transatlantic and Latin America and Africa routes, where shippers are seeing rates rise daily.

“It is now almost impossible to hold a booking and rate for more than a few minutes,” says U.K.-based Westbound Logistics.

“Even when bookings are accepted, shippers are often faced with additional equipment issues that force containers to be sourced and transported from alternative ports, at additional cost,” says the carrier.

American Jon Monroe, founder of Jon Monroe Consulting, said the Asian export market was broken: “Some carriers require you to send them weekly booking proposals, and then they will let you know seven to 10 days before the vessel departs whether or not they will accept them.”

“It doesn’t matter how far in advance you book; they can cancel at the last minute and there’s nothing you can do about it,” Mr. Monroe added.

Westbound Logistics said space availability for May was “already looking critically low” and that rates had “risen sharply again, and are expected to continue to do so for the very limited booking slots that remain available.”

The Ningbo Containerized Freight Index (NCFI) commentary said that “some voyages burst and overturned containers.”

For his part, Freightos research director Judah Levine said the impact of the Suez Canal blockade in March on container flows and freight rates “has finally been felt this week.”

He explained, “Carriers trying to avoid or minimize delays caused by congestion at ports such as Rotterdam – where a queue of ships has formed – are skipping calls and offloading containers at alternative ports, speeding the return of empty containers to equipment-scarce Asian home ports, but causing further hardship for many European importers.”

In the transpacific, cargo rates are stable, even if the market is not. The new short-term component of the Xeneta Shipping Index from Asia to the U.S. West Coast rose just 1.24% this week to $4,080 per 40 feet, but the market remains red hot.

According to Mr. Monroe, most of the Asia to U.S. space for May “is already booked,” adding that “the power is definitely in the hands of the carriers, who can, and are, effectively charging what they want in terms of FAK rates and premium surcharges.”

He added: “For all their talk of partnerships over the years, as soon as the carriers have had a chance to control the game, they’ve taken everyone’s marbles.”

Source The Loadstar

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