While rates are still below last year, the increase is largely due to the peak season when various shopping promotions are held. Lack of capacity is also contributing to the higher prices. For example, the average rates from Hong Kong to Europe and North America are up 91.9% over last year. Asia-Europe ocean freight spot rates are also at record highs due to the shortage of empty containers and high demand.
CCFI rose by more than 15%
Average rates between Asia and Europe are increasing at a fast pace, according to the Shanghai Containerized Freight Index (CCFI). Rates between Asia and northern Europe have increased by nearly a quarter in one week, while rates in Asia-Mediterranean trade are up nearly 30% in the past week. Truckers are also finding it difficult to fill up trucking vacancies in many areas, which is pushing up rates.
While the CCFI is a measure of the costs of shipping cargo, it is not a reflection of what shippers actually pay for services. Many companies charge premium fees and surcharges for space and equipment. Moreover, some freight forwarders are chartering their own ships to transport their shipments from Denmark to China. To combat these rising costs, container lines need to return to providing a convenient and fair service to their customers.
Suez Canal blockage caused shipping charges to soar
In March of 2021, the Ever Given got stuck in the Suez Canal, sending shipping charges through the roof. The Suez Canal handles 12% of the world’s trade, so the disruption was a huge hit to global trade. The blocked canal caused delays, costing carriers between $2.2 billion and $3.9 billion. Cargo ships already face long delays at sea, berthing and dispatching, and adding additional delays from the blockage made shipping rates even higher.
In addition to the impact on shipping costs, the ever Given’s wreck damaged the Suez Canal’s infrastructure. After the incident, there was a massive delay in shipping through the canal, with up to 350 vessels stranded on either side of the canal. It could take weeks for a ship to complete its journey through the canal.
The blockage has added a lot of costs to shipping companies, including additional inventory and longer delivery times. According to Sea-Intelligence, there’s already a 60% to 80% decline in capacity on Asian-European routes as a result of the Suez incident. The Suez Canal Authority is trying to fix the issue.
While the closure of the Suez Canal will result in a decrease in overall cargo volumes, it will impact carriers by causing a disruption that will clog up ports around the world. This disruption will affect warehousing, trucking, and terminal operations. The larger ports will be affected the most by the increased number of calls.
Europe region experienced similar capacity restraints
China’s expanding footprint across Central, Eastern, and Southeastern Europe presents both opportunities and challenges for policymakers in the European Union. While it brings new economic opportunities, China’s presence in the region can erode political stability and complicate the development of EU consensus on key issues. In this article, we analyze the impact of China’s growth in these countries and the implications for policymakers in the United States and Europe.
In recent years, public perceptions about China have shifted in the region. Although public sentiment towards China has become increasingly skeptic, countries such as Hungary, Romania, and Greece remain among the most China-friendly in Europe. This trend is unlikely to change anytime soon, as China’s influence in the region is increasing.
Transatlantic rates have decreased by 15% since August
Transatlantic rates have fallen 15 percent since August, a sharp drop after a relatively low level at the start of the year. The decline is driven largely by the significant shift in volumes from west to east. Rates have fallen a full five percent in the first four weeks of 2019, with further decreases expected throughout the rest of the year.
The fall in transatlantic rates is in line with falling volumes and lower rates from Asia to North Europe. Although the demand for these services have fallen in recent months, they remain significantly higher than those for Asia – US West Coast shipping. This may be because of persistent congestion in ports, but it is also possible that carriers have simply shifted capacity to more profitable transatlantic routes.
Trans-Pacific spot rates, meanwhile, have resumed their slow slide. According to Drewry, an independent provider of maritime industry services, the Shanghai-Los Angeles assessment was down 41% year-on-year, while the Shanghai-New York assessment was down 28%. Meanwhile, FBX China-West Coast rates dropped to USD 5,533 per forty-foot-equivalent unit (FEU).
Despite the decline, transatlantic rates remain higher than last year, which isn’t indicative of a complete resolution of the global logistics problem. According to Freightos, the rate of ocean containers has been steadily decreasing over the past few months, but this isn’t necessarily a signal that global logistics issues are being solved. In the United States, a rail workers’ strike threatened to increase port congestion and create a backlog throughout the country, while the declining demand caused shippers to cancel some sailings.
Asia – US West Coast rates are level
Ocean and air freight rates between Asia and the US have declined over the past week following the disruption caused by Hurricane Ian, which closed major US ports and disrupted rail and port operations. While trucking operations have yet to fully recover, prices have fallen considerably, with rates on the Asia-US West Coast down 16% this week. Prices are still around their October 2018 levels, though this decline could spell trouble for carriers operating on this lane.
The decrease in prices is expected to be temporary as the capacity cut will take some time to effect. However, it is encouraging to see that the price of ocean freight is level at the moment, and that the underlying demand for air freight remains strong. While rates have fallen in recent weeks, they are still at near record levels.
Several factors are affecting ocean and air freight rates, particularly in Asia. Demand for cargo out of Asia has declined, with carriers reducing the number of anchored vessels at key ports. As a result, blank sailings continue to dominate the spot market for September.
The prices of jet fuel have also increased. As a result, SENATOR has been conducting intensive negotiations with airlines to get the best prices for its customers. Meanwhile, rates on air freight from Asia are under pressure and shipping companies are reducing ship departures. During the Golden Week, up to 10% of ship capacity is expected to be cut.