Freight Rates Soar Multiple Times! Middle East Shipping Costs May Break $10,000
As the first round of regional negotiations failed to achieve a breakthrough, the security situation around the Strait of Hormuz has heated up again. Affected by this, many leading freight forwarders have reported that since this week, the sea freight for 40-foot containers entering the Persian Gulf countries by land via ports outside the Taiwan Strait has generally exceeded the US,000 mark.
Market data shows that the all-inclusive quotations of two shipping companies from major Chinese ports to the core hub of the Middle East, Jebel Ali Port, have reached US,346 and US,502 respectively (including emergency surcharges), which is only one step away from the 10,000 yuan mark. Currently, freight levels at basic ports in the Persian Gulf have climbed to more than four times the level before late February, and the land transportation link is estimated to take 3 to 10 days. Taking the voyage announced by Maersk as an example, the entire transportation time from Shanghai Port to Jebel Ali Port has been extended to about 32 days and 10 hours.
As the restricted access to the Strait of Hormuz enters its sixth week, the impact of the incident on the global shipping industry has not only been reflected in the sharp increase in shipping rates across the board, but also in the high-risk environment. Maritime insurance premiums and transportation time costs have also increased significantly.
According to relevant news from the London insurance market, as early as early March, a number of insurance institutions had successively withdrawn additional risk protection for the waters of the Persian Gulf. Even if there are companies willing to underwrite insurance, premiums have skyrocketed. Data show that before this change in the situation, the additional risk rate for ships was usually about 0.2% to 0.3% of the hull value, but now it has soared to 1% to 3%, and some high-risk routes even reached 5% to 7.5%; similar rates in the Red Sea have also increased from 0.25% before the change to 1% to 3%. Premiums have increased as much as tenfold.
In addition to skyrocketing insurance premiums and basic freight rates, many shipping companies have also imposed various emergency surcharges. As of early April, the freight rate for 40-foot containers on the Asia-Europe route has risen from approximately US,200 before the situation changed to US,800; the freight rate for oil tankers on the Persian Gulf to Asia route has soared from approximately US0,000 to US.5 million per voyage.
It is understood that CMA CGM took the lead in resuming Persian Gulf routes in mid-March, with ships calling at Fujairah Port and Khor Fakkan Port in the United Arab Emirates, and then transferred to Jebel Ali, Khalifa, Dammam, Hamad, Umm Qasr, Shuaiba, Bahrain and other places via land or feeder ships. It is worth noting that Fujairah Port has restrictions on the residence time of containers. Overdue cargo will be moved to Sharjah Port, and customers need to bear additional hauling and warehousing costs.
The current market is not only facing the dilemma of high freight costs, but also the phenomenon of "prices but no goods". High transportation costs have inhibited the willingness of some cargo owners to ship goods, while unstable routes and uncontrollable timeliness have also delayed the execution of some orders. The market as a whole shows the characteristics of weak supply and demand and high and volatile prices.
At the same time, billing structures are changing. Traditionally, the freight rate of 40-foot container is usually calculated based on the price of 20-foot container. However, under the current situation of tight transportation capacity and shortage of land transportation resources, this rule has been broken. The quotations for 20-foot containers on some routes have been significantly close or even close to the level of 40-foot containers, further reflecting the reality of misallocation of transportation resources.
At present, shipping companies that have resumed Persian Gulf routes include CMA CGM, COSCO Shipping Lines, Mediterranean Shipping Company, Maersk and Hapag-Lloyd, etc., but there are still many shipping companies that have not yet reported the resumption of this route.
Taken together, under the multiple effects of geopolitical risks, shipping route uncertainty and overall rising costs, Middle East routes are entering a stage of high volatility. In the short term, if the situation does not significantly ease, there is still a possibility that freight rates will continue to rise or even exceed the US,000 mark. For freight forwarders and cargo owners, how to balance the pace of shipments in a high-cost and high-risk environment has become the most realistic challenge at present.
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