Sea freight charge is on the rise

There are signs that sea freight rates may be falling temporarily, but delays caused by the lockdown are increasing transport times on intra-Asian trade routes.  

Rakesh Pandit, chief executive of India's Conbox Logistics, said freight rates from China had fallen last month but noted delivery times were a "significant challenge". "Shipping times have been increasing over the past eight weeks, which makes the market very unpredictable. The average transit time from China to Nava Sheva and Port Mundra used to be between three and four weeks, but now the same service takes more than five to six weeks. For example, our mid-March shipment is still in transshipment ports and the estimated time of arrival is shown as the second week of May."  

Peter Sundara, head of global shipping for a company in Singapore, says the delays are also affecting trade between China, Australia and New Zealand.  "Trade from China hasn't changed much in terms of schedule," he explained. "Ships are still docking, but there are a lot of delays because of the lack of truck drivers."  But the knock-on effect is that Southeast Asian ports, such as Singapore and Port Klang, are relatively free of congestion.

Given the region's manufacturing dependence on Chinese suppliers, the supply of raw materials and intermediate goods from the Chinese region has slowed. "Raw materials are becoming very expensive because of high inflation, so some shippers are delaying production," he said.  

He noted that spot rates were falling across the board, while shippers were "facing downward pressure on rates for the first time in more than two years". He added: "China goes into the five-day May Day holiday and there will be a lot of pent-up demand after that. However, any freight rush is likely to be offset by additional capacity on the way. ANL, for example, will launch a new service from Shanghai on May 31."  

Mr Sundara also questions how shipping companies will respond to downward pressure on their rates: "Will they keep their rates high or will they focus on maintaining market share?"  

Seaborne rates for long-term contracts rose for the third straight month in April, according to a report by an industry analyst firm. Global shipping costs surged 11.1 per cent, up 109.9 per cent year on year, according to analytics firm Xeneta.  

Supply chain demands, successful shippers' strategies, and ongoing COVID-19 disruptions have impacted shippers worldwide.  

New data from Xeneta Shipping Index(XSI)Public Indices show that long-term gains in major trade corridors are almost universal.  

Developments in Europe led the way in April 2022 as the import benchmark surged 16.8% (up 107.3% yoy), while the export rate climbed 20.3% in the month and is now 102.8% higher than in April 2021.  

According to The Xeneta report, price growth in the Far East was smaller, with imports up 0.8% (52.3% yoy) and exports up 9%, up 127.7% yoy.  

In the United States, the import index rose 9 percent, up 109.7 percent year on year, while the export index fell only 0.8 percent this month, still up 29.8 percent year on year.  

Xeneta chief Executive Patrik Berglund pointed to the shift of shipping lines from us west Coast to US East Coast hubs and the impact of the outbreak control, revealing that container imports in Los Angeles were down by about a fifth year on year, And the port of New York and New Jersey is now the country's second-busiest import destination -- behind Long Beach.  

Shipping companies are taking action to protect their dominant position, as can be seen with the 2M alliance aiming to eliminate three far East-Northern routes in May. Maersk recently reported figures for the first three months of the year, with revenues of $19.3bn and underlying EBITDA of $9.2bn.