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Ocean carriers are racking up massive profits from the unrelenting spiral of rate hikes and surcharges across virtually all liner services.
Today’s Shanghai Containerized Freight Index (SCFI) recorded a further 81-point gain across its tradelane components and a new record reading of 1,938.32, a colossal 150% higher than a year ago.
Spot rates to North Europe increased by 9%, to $1,644 per teu – 134% higher than 12 months ago.
However, shippers told The Loadstar this week carriers were quoting rates, via e-mail and digital platforms, some three times higher than these for Rotterdam and Antwerp, and “much more” for the UK.
The high rates also come with a raft of surcharges and fees that, according to some, is now making the shipments unsustainable.
The Loadstar heard this week of two big orders from China to the UK that had been cancelled due to the contract needing to be renegotiated, while others have opted to hold shipments in warehouses until the market cools down.
Shippers are incensed that carriers are “taking advantage of their stranglehold on the supply chain” by loading on more fees and surcharges.
“They are really kicking us while we are down,” said one forwarder.
Another UK forwarder was equally angry with the carriers’ treatment of its customers, but also blamed the country’s container ports for what he considered to be a serious threat to businesses.
“For every problem there is a surcharge,” he said. “This massively punishes SMEs already suffering due to mismanagement at Felixstowe and other ports.”
And shippers from Asia to the Mediterranean are also suffering spot rate hikes over and above the SCFI reading, which this week increased by 7% to $1,797 per teu – 160% higher than a year ago.
On the transpacific, the SCFI rate components for the US west and east coasts were stable again this week: west coast rates edging up $25 to $3,913 per 40ft and the east coast increasing by just $6 per 40ft to $4,682.
However, here too carriers are indirectly increasing rates to shippers via premium guarantee fees and surcharges.
Nevertheless, the shipping lines on the route could boost their earnings even more if they could speed up the return of equipment to Asia. Jon Monroe of US-based Jon Monroe Consulting, reports that “35% to 45% of bookings are being rejected due to no equipment”.
He added: “The shortage of containers in Asia is causing carriers to depart load ports with less than full vessels.”
Christoph Baumeister, senior trade manager, Asia/ISC – Europe at Flexport, agreed: “Equipment is becoming rarer and carriers cannot always release containers under premium rates.
“Serious port congestion at the US west coast and the UK presents even more of a challenge. Schedule reliability will drop further – the on-time performance of certain loops is already below 40%,” he added.
Notwithstanding the current short-term rate spike, which analysts believe could continue until the Chinese new year in February, shippers are bracing themselves for some hefty increases in longer-term contract rates for 2021.
During Maersk’s third-quarter earnings presentation this week, CEO Soren Skou confirmed that its contract rates would increase, explaining: “The contract market is always impacted by whatever the spot market is at the time of negotiation.”