Industry Update: Far East Imports
As the import of sea freight containers continues to cause disruption to our clients and partners in the UK, we're hoping to provide a latest update on the market and share some of the industry news that will provide some additional rhyme if not reason to the present situation.
Demand remains very strong on the Asia to Europe services, with all carriers operating at 100% capacity with a 20% roll pool. A huge shortage of equipment levels is now present in all major ports in Asia. Chinese main ports seem to be the worst affected, in particular Ningbo and now Yantian. By week 49, there will only be -1% of the capacity missing and demand remains huge. Following multiple conversations with industry professionals and the shipping lines, consensus is we are likely to see this level of pressure on both, rates, demand and equipment until after Chinese New Year, which is 12th February 2021.
We have seen several examples of carriers cancelling planned bookings with no notice and creating large roll pools of up to 3 weeks at transhipment points such as Singapore. Due to the congestion at UK ports, some carriers have now altered their services to call in Europe before the UK, or omit the UK altogether. UK ports are usually the first ports of call on any loop they are scheduled on. Southampton is now the 5th port of call on CMA’s service, which has a huge impact on the transit time. Carriers are deliberately trying to avoid UK cargo and are refusing to take bookings in some instances. Evergreen have chosen to omit the UK altogether for a period, which adds further frustration to the market.
Due to huge pressure on UK ports, carriers introduced congestion surcharges of $150-$200 per TEU, however the situation is getting worse and surcharges are likely to increase. Peak Season Surcharges are also being increased to extreme levels of $600/TEU.
Rates into the UK and Europe are now at their highest level since 2009 and the increases are likely to continue. Market rates sit between $5000-$6000/HC and we expect to see $7000/HC in December, if not earlier.
There are issues on other trades, which are compounding the equipment shortages in China. As of right now, there are 15 container ships anchored outside of Long Beach Terminal in LA which are unable to be offloaded. The result is that empty equipment can’t be returned back to origin quick enough and that has huge implications for all trades.
The Shanghai Containerised Freight Index (SCFI) a reliable form of economic transport shipping index, giving an indication of market rates on containerised traffic, has shown rates increase almost 30% with weeks form 23rd October to 13th November and that increase will now be more stark in light of rates entering the market presently.
Carrier expectations for Q1 rates are between $3000-$4000/HC at the lower end and $5000-$6000/HC at the upper end.
At Maltacourt we're doing all we can to support our customer's supply chain and manage the increasing difficulties in the market, I thank you for your continued patience and understanding during this period. No matter the difficulties our teams will always look to act in your best interests and support your requirements.