Carriers eye higher contract rates to hedge against spot market volatility
Container spot rates from Asia to Europe and Asia to the US eased back further ...
With shippers facing skyrocketing container freight rates and premium fees across main and secondary trades, ocean carriers are now pummelling their customers with a mass of equipment imbalance and intermodal surcharges.
The strategy of carriers is to get as many boxes back to Asia in the shortest possible time to take advantage of exceptionally strong demand and record high rates, and to do so it is hitting shippers with extra costs.
The Loadstar reported last week that Asia-North Europe carriers were charging up to $5,000 per 40ft for guaranteed equipment and space on ships from Asia, but, under the radar, backhaul rates have also been spiking and are up over 100% year on year.
Anecdotal reports to The Loadstar suggest that to guarantee a shipment to Asia, North European exporters are paying considerably more than the circa $1,200 per 40ft recorded by Drewry’s WCI index.
“The first problem is to find a carrier and a port that will accept our boxes, and after that there is normally some sort of add-on,” said a UK shipper.
“If we want to get our cargo shipped promptly we don’t really have any other option than to pay,” he added.
Meanwhile, European shippers of temperature-controlled cargo to the Middle East and Asia are also facing additional charges as the reefer equipment is in increasing demand on the headhaul Asia-Europe route as a substitute for standard containers to accommodate bookings of high-paying electronic goods.
MSC is among carriers to surcharge export reefers, adding $500 a box from 10 November.
“Due to the strong demand of reefer containers for European exports, and consequent need of costly ad hoc inventory positioning, MSC will implement an equipment imbalance surcharge (EBS) for reefer cargo moving from Europe to the Middle East and Far East,” said the carrier.
Elsewhere, MSC has announced an emergency intermodal charge (EIC) in North America of $350 per container from 4 December for boxes moving on both the headhaul and backhaul routes, which it said was necessary “due to the ongoing congestion situation at the ports of Los Angeles and Long Beach”.
Indeed, the two biggest US ports are in danger of being overwhelmed by an unrelenting flood of imports. According to LA’s Signal data forecaster, which provides a three-week overview of container imports, predicted volumes arriving at the port complex next week will 26% higher than the same week of last year and an astonishing 56% higher for the week after.
“So far, we see strong demand through to the end of November which means it will roll into December,” said Jon Monroe, of Washington state-based Jon Monroe Consulting.
He said online spending in the US was “continuing to trend up” and that the demand was being attributed to a consumer shift in spending from services to retail and noted that Christmas shopping had already begun with “Black Friday deals everywhere” in the US.
“It is very possible that demand will continue through to the Chinese New Year [12 February],” he added.