Container freight rate rises continue
Amid continuing and unexpectedly strong demand, container freight rates on key east-west trades are resuming their rise in what is normally a seasonal post-peak slow period, with ocean freight spot rates out of China this week around 10% higher than what is usually the end of the peak season, China’s Golden Week in early October.
Analysis by logistics investment analyst Jefferies noted that the average rates on the Shanghai Containerized Freight Index (SCFI) increased 10% to $1,665/TEU last week (before the implementation of the latest Peak Season Surcharges), “a new record-high since the data began”, and is 109% ahead of this week last year, and up 34% on average pricing for the year to date (YTD) – “reflecting record-low retail inventories” – while idle capacity now stands at only 1.6%, indicating most available container shipping tonnage was currently deployed in the market.
The rate increase shows no sign of stopping, with MSC announcing an adjustment to their Peak Season Surcharge for the later part of November at $600 per TEU - double that to the PSS of early November. Its expected other shipping lines will follow suit which will see rates continue to rise, in what is usually a period slow down as we move into the New Year, post the pre-Christmas hike.
With capacity tight, we recommend advance booking notice at least 21 days prior to CRD, with industry professionals adding that the market was “expected to be very strong through the end of November."
It was also highlighted that a “very severe equipment shortage may require equipment substitution (40’ST, 40’NOR and 20’DC instead of 40’HC)”.
In the UK, the serious port congestion in Felixstowe is spreading to other UK ports, e.g. Southampton. Further delays and port omissions are taking place. Carriers are looking to reduce cargo into the UK due to slow turnaround of containers and haulage limitations. They have put various restrictions in place, these restrictions will continue to facilitate capacity constraints but with high demand still present, rates will be reflected accordingly.