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Will shipping prices rise again?

Views: 1000     Author: Site Editor     Publish Time: 2022-03-09      Origin: Site

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Sea and air freight rates benchmarking and market analysis platform Xeneta said Monday that eastbound long-term deals across the Pacific in 2022 will be stronger than in previous years as retailers and other importers prioritize vessel capacity and service over freight rates. Significant increase in service contracts signed.

"For most shippers, securing the capacity they need will be more valuable than a carrier's commitment to getting the lowest rates," Xeneta said in a statement.

Xeneta said the average long-term deal on the west coast was $6,548/FEU in the past three months, compared with $10,100/FEU on the east coast, as importers "flocked to the east coast to avoid the congestion and associated risks on the west coast. ".

Congestion on the sea and land side reduces capacity

Shipping lines are showing unprecedented strength in contract negotiations in 2022-23, driven in part by strong import volumes, but also because supply chain bottlenecks at Asian and U.S. ports are reducing the effective capacity of carriers to deploy ships. Thorsten Meincke, director of air and ocean freight at freight forwarder DB Schenker, noted that ship operators are slowing voyages from Asia to better adjust arrival times at U.S. ports based on berths and labor availability.

According to Meincke, capacity on the trans-Pacific route increased by 31% last year, but effective capacity fell between 8% and 25% in different periods due to delays or slow sailings in ports, resulting in a "boom in interest rates".

U.S. imports from Asia rose 4.5% in January from a year earlier to a record 1.7 million TEUs, after rising 14.4% for all of 2021, according to IHS Markit's PIERS. While industry analysts and carrier representatives say import growth will slow to a more normal single-digit rate this year, supply chains are so loaded that they will continue to reduce the effective capacity of ships deployed across the Pacific. .

Russia-Ukraine conflict may lead to soaring total cost of container freight

The Russian-Ukrainian conflict has exacerbated the already intractable supply chain crisis. According to Sea-Intelligence, the global container industry consumes about 63.9 million tons of fuel annually, which would add $7 billion to annual costs if fuel prices remain at current levels

"While fuel prices have been on an upward trend since the beginning of the year, it is clear that they have also risen sharply following the outbreak of the Russian-Ukrainian conflict," the analyst firm said, adding $19 million to the total cost on March 4 alone. .

It is reported that about 30% of the operating costs of shipping companies are oil prices. The rise in oil prices means that the costs of shipping companies are increasing, and shipping costs are increasing. Shipping companies increase freight accordingly, and ultimately customers pay for oil prices.

The shipping crisis has intensified, and the freight rate has tripled?

Glenn Koepke, an expert at FourKites, a supply chain consultancy, said recently that the conflict may cause another blow to the global supply chain, leading to skyrocketing prices for sea and air freight. The freight rate per FEU on the route from China to the United States may double or triple the current rate, that is, from USD 10,000 per 40-foot container to USD 30,000.

The world's top two container shipping companies, Maersk and Mediterranean Shipping (MSC), as well as France's CMA CGM, Germany's Hapag-Lloyd and Japan's ONE Ocean Shipping Co. Orders for Russian goods have been suspended. According to data from Alphaliner, an international shipping industry analysis agency, the total shipping capacity of these five companies accounts for nearly 60% of the global market. Market participants predict that their suspension of services to Russia will exacerbate supply chain difficulties and increase shipping costs.

At present, container shipping companies have begun to increase freight rates. From March 15th and April 1st, container shipping companies have raised the "comprehensive container rate surcharge" (GRI) and "fuel surcharge" (BAF). International shipping giants even started Add "port demurrage". Industry insiders pointed out that after this round of increases, the freight rate increase may rise by 50%.

Glenn Koepke said it was not yet peak season for the container shipping market, but as companies began to increase summer volumes, there would be a significant impact on the supply chain. Some shipping companies offer other alternative routes. For example, Hapag-Lloyd will open the China-Germany express service from April, connecting Shenzhen Dachanwan Terminal to Hamburg, with a transit time of 27 days.


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