Shipping Lines to Cancel More Voyages as Rolled Cargo Mounts and Freight Costs Surge
Recently, container spot freight rates on the trans-Pacific and Asia-Europe routes have experienced a weak rebound. Among them, the Asia-Europe Europe route, which has been falling for three consecutive weeks, has finally stopped falling. However, the market is still generally doubtful about the success of the new round of price increases that shipping companies are about to implement.
The "World Container Index" (WCI) recently released by Drewry shows that on the Asia-Europe route, the freight rate of the Shanghai-Rotterdam route increased by 2% to US,170/40ft; the Shanghai-Genoa route increased slightly by 1% to US,075/40ft. The shipping company plans to implement a new unified freight rate (FAK) from May 15. The target price for the Nordic route is US,500-4,500/40ft and the Mediterranean route is US,500-4,600/40ft. This slight increase has given it some market initiative.
However, market feedback and institutional analysis are cautious about the sustainability of price increases. A freight forwarder on the Asia-Europe route revealed to the industry media "TheLoadstar" that freight rates were basically flat from April to the first half of May.In the second half of May, affected by the cancellation of large-scale voyages, there were signs of an increase of about US0/TEU, but space allocation was tight and cargo was dumped.
Drewry data shows that in May, the effective capacity of Asia-Europe and Northern Europe routes is expected to decrease by 3% month-on-month, and that of the Mediterranean route will decrease by 10% month-on-month. However, analysts at Linerlytica pointed out that the capacity reduction in May was limited, and the capacity is expected to rebound in June. Shipping companies have an "arduous task" to complete the subsequent three rounds of price increases on the Nordic routes, and capacity adjustments will be difficult to support the new FAK price level.
Price increases on trans-Pacific routes were even more pronounced, driven by the imposition of surcharges. WCI data shows that the freight rate of the Shanghai-Los Angeles route increased by 5% on the week, closing at US,062/40ft; the Shanghai-New York route increased by 7%, closing at US,721/40ft. However, the freight forwarder said that there is still a discount in the actual transaction price in the market. Some 40ft freight rates on the West Coast are as low as US,500 and on the East Coast are as low as US,550, which is significantly different from the index price.
At the same time, space constraints and supply chain disruption risks are intensifying. West Coast freight forwarder FreightRight warned that although space can theoretically be booked, capacity reductions have resulted in a large amount of cargo being dumped and shipments delayed. What’s even more serious is that some ships were forced to unload cargo at the Busan transit port in South Korea due to overloading, in order to reduce the load pressure on trans-Pacific voyages. The agency predicts that the voyage cancellation rate for the rest of this month will be higher than in April. THE Alliance has also announced that it will make major adjustments to trans-Pacific route services in early May and implement multiple voyage cancellations.
Freight price fluctuations, voyage cancellations, risks of dumping containers...these uncertain factors are testing the export rhythm of every shipment.The tighter the shipping space, the more important it is to ensure that there are no mistakes in the declaration process - once the customs declaration is canceled or the inspection is delayed, the shipping date may be missed, or the container may be dumped or even high demurrage fees may be incurred.
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