Good news, bad news 'and even worse news' from congested Euro ports
The knock-on effects of the blockage of the Suez Canal is likely to impact North ...
Container spot rates from Asia to Europe and Asia to the US eased back further this week from their record highs.
Nevertheless they are expected to stay at very elevated levels for some time.
According to today’s reading of the Freightos Baltic Index (FBX), the rate for a 40ft from Asia to North Europe declined 3.3% on the week, to $8,037, but for Mediterranean ports, the rate was off by just $37, to $7,925 per 40ft.
Moreover, many shippers are still being obliged to pay additional fees to guarantee container availability, and for UK ports there is a commonly applied $2,000 “out port fee” to add.
A year ago, the FBX reading stood at $1,453 and $2,101 per 40ft respectively for North Europe and the Mediterranean.
Lory Cheung, overseas marketing specialist at China-based MRF International Forwarding, told The Loadstar this morning carriers were “grabbing what they can, while they can”, as eventually the lines expected the market would return to some sort of normal.
“The carriers seem to prefer signing high long-term rates with BCOs instead of forwarders at the moment,” he noted, which suggested lines were endeavouring to lock-in contract rates at the highest possible levels to insulate them against spot market volatility.
Indeed, the current hyper rate inflation on the trade is forcing shippers to cancel orders for lower-value product, as The Loadstar reports today.
One UK-based NVOCC told The Loadstar he had seen forward bookings from China for a garden furniture importer decline by a third for this year.
“The carriers are shooting themselves in the foot with these high rates; they will lose so much business as many importers cannot sustain these rates for their low-end value products,” he said.
However, Andy Cliff, director at UK-based Straightforward Consultancy is pleased at any downward trajectory from the “still crazy” levels. He said: “Hopefully the lines don’t play games and blank more sailings to prop up these unfair and unsustainable rates.”
Meanwhile, on the transpacific, the US west coast component of the FBX slumped by 13%, to $4,283 per 40ft, this week, although Freightos expects the decline to be temporary, given the unrelenting strong demand on the trade. The reading for east coast ports declined by a more modest 2.5%, to $5,673.
“Although rates are falling, they will likely stay very elevated for some time,” said Freightos research lead Judah Levine. “With US retail inventory levels still low, restocking to normal levels could take to the end of the year.”
Meanwhile, Jon Monroe of Washington state-based Jon Monroe Consulting, suggested there was some evidence that the strong momentum on the trade could possibly be maintained to Chinese New Year 2022.
And the unprecedented strength of the market is bad news for shippers endeavouring to negotiate new annual Asia to US contracts.
“Many people I have talked to suggested this will be a quick negotiation,” said Mr Monroe. “This year it is more a matter of ‘how can I move my product?’ as opposed to ‘what is my cost?’.”