News / Shippers face soaring rates as they battle for alternative space after Hanjin collapse

© Mihail Ivanov

Shippers are starting to feel the heat from the collapse of Hanjin Shipping as container spot rates leaped ahead on the Asia-North Europe and transpacific tradelanes.

According to Drewry, spot rates quoted yesterday from Asia soared by 42% and 39% in one day to the US and North Europe respectively, as shippers rushed to find alternative space at almost any price.

Today’s Shanghai Containerized Freight Index (SCFI) records a 51.4% weekly hike in transpacific spot rates to the US west coast, to $1,746 per 40ft, and a 45% jump in rates to the US east coast, to $2,441 per 40ft. T

The Korea International Trade Association (KITA) today projected that the rate from China to Long Beach would increase to $2,200 per 40ft this month.

Elsewhere, the SCFI records a 36.5%, or $254 per teu, increase in container spot rates for North Europe to $949 per teu. But anecdotal reports coming into The Loadstar suggest that there will be a further massive jump in rates next week as carriers are able to fully implement GRIs and FAK increases without difficulty for non-contracted cargo.

Surprisingly, the fallout from Hanjin’s demise has not had an impact so far on rates to Mediterranean ports with spot rates recording the only fall in the index, down 6.1% to $519 per teu, although the route is likely to feel the contagion effect of higher spot rates from other trades during next week.

Supply chain software provider CargoSmart today provided concrete evidence of the immediate effect on Hanjin’s schedules.

Of the 100 container vessels in Hanjin’s fleet, 52 were off-schedule from Wednesday to Thursday this week, it said.

“Forty-six vessels with an original estimated time of arrival on August 31/September 1 have not yet arrived at their next scheduled port. Six vessels with an original estimated time of departure on August 31/September 1 have not yet departed from the ports,” it said.

Some estimates put around 500,000 teu of cargo either loaded on Hanjin ships or in its boxes currently in the supply chain, and the bankruptcy could not have come at a worse time for shippers expecting delivery of merchandise in time for the holiday season.

There are also mounting concerns that just-in-time manufacturing assembly lines will halt as vital parts get caught up in weeks– or possibly months – of delays, as legal teams battle over ownership of containers.

According to KITA, around 40% of Samsung’s products are exported on Hanjin vessels, LG Electronics moves 20% of its goods on the container line and Nexan Tire Corp around 25%. One UK forwarder told The Loadstar yesterday his client had already instructed the shipment of replacement goods from China and that some vital parts would likely be airfreighted.

He said: “Unfortunately space was already tight before the Hanjin crash and it is now difficult to find a carrier willing to guarantee space. Unsurprisingly, rates have gone through the roof.”

Although his client said he preferred not to use any other CKYHE ships in case there were any repercussions from its ex member, he admitted he might not have any other options. And even those carriers that are not part of the CKYHE alliance, have begun to limit their exposure to Hanjin.

OOCL today said its cargo would not be loaded on Hanjin vessels and that it would not accept Hanjin containers on its vessels – although those already aboard would be discharged at the intended port. OOCL would “liaise with Hanjin Shipping and the marine terminal operators to release cargo as soon as possible” for containers on board vessels under arrest.

However unfortunate the demise of Hanjin for its employees, it could be seen as a potential lifesaver by rival carriers, with collectively full-year losses recently estimated to amount to $10bn. One UK carrier told The Loadstar that, after the dust had settled, he expected shippers to be “banging on the door” to agree contract rates.

But, as has happened in the past, it is also possible that carriers will be reviewing some of their lowest contract rates on file and asking customers to pay an additional premium to guarantee shipments.