Tag: Transport

Posted on in Business

Box shipping rates spike on container shortages and strong demand

Lee Hong Liang | Nov 16, 2020

This week, the Shanghai Container Freight Index (SCFI) spot rate index to Europe rose sharply, with Northern Europe rates up 21% and Mediterranean rates up 23% – potentially with more increases ahead, according to Lars Jensen, ceo and of SeaIntelligence Consulting.

“This means that both these trades are now at rate levels which have not been seen since early 2014. And more increases might be in store,” Jensen forecast.

Hapag-Lloyd, for instance, has announced FAK rate levels on East Asia-Europe at $1,110 per teu as at 1 November 2020 – a level they had maintained since July. However from 15 November, this was raised to $1,445 per teu, almost matching the increase seen in the SCFI this week.

From 1 December, the FAK rate will increase to $2,445 per teu. “Hence if the market strength continues we could be in store for an Asia-Europe rate increase of $1,000 per teu over the next two weeks, which would bring the SCFI rate into an all-time record, just as we have seen with the other deepsea trades,” Jensen said.

Jensen further observed that the rate levels from Shanghai to Singapore continue their “extreme increase” this week as well. “We are now at $728 per teu – compared to just $170 per teu three weeks ago and $131 per teu six weeks ago. Spot rates to Australia, West Africa and East Coast South America all continued to set new all-time records since SCFI was launched in 2009,” he said.

South Korean carrier HMM noted that while the fourth quarter is a traditionally low season for container shipping, demand volumes are anticipated to remain strong as retailers in the US and Europe have continued to replenish inventories ahead of the year-end holidays and the Chinese New Year in February 2021.

“The scarcity of container equipment, which has negatively affected the main east-west trade lanes, currently spreads to the intra-Asia trade. It has caused an increase in freight rates in recent weeks in the intra-Asia market, coupled with a backlog of containers sparked by blank sailings and vessel delays since China’s Golden Week period in last October,” HMM stated.

The container shortage is especially severe for the forty-foot equivalent unit (feu) due to its “strongest increase in demand following one of the strongest decreases in demand ever” within six months, according to Hapag-Lloyd.

SeaIntelligence wrote: “As the freight rates at the same time are reaching record levels on the Asia export trades, the carriers are clearly prioritising to get empty containers shifted back to Asia as fast as possible – even to the degree where they are willing to forego viable export cargo, as that would serve to slow down the repatriation of empty containers.”

Source from: https://www.seatrade-maritime.com/containers/box-shipping-rates-spike-container-shortages-and-strong-demand

Posted on in Business

Ocean rates still rising alongside ‘major problems’ for those on the front line

By Mike Wackett 16/10/2020

Today’s Shanghai Containerized Freight Index (SCFI) shows a further 10.65-point gain in its comprehensive index to 1,448.87 – 71% higher than at the end of May.

The huge increase over the past five months, in the midst of the pandemic, has been driven by substantial gains in container spot rates across both main and secondary tradelanes.

For example, on the secondary routes of Asia to Australasia, Asia to South Africa and Asia to Latin America, spot rates have spiked by 94%, 155% and 328%, respectively.

And on the main Asia-Europe and the transpacific east-west trades, carriers servicing the routes removed significant capacity at the start of the pandemic, but demand bounced back much sooner than expected, and rates skyrocketed in the scramble to secure space.

Carriers have mostly reinstated the blanked sailings and added extra loaders to cover peak season demand, which, at the start of the lockdowns looked very unlikely to feature at all this year.

Alphaliner reported this week that Asia-Australasia carriers had added weekly capacity of 7,200 teu in new loops in the past month, in addition to deploying several ad hoc and sweeper sailings.

Meanwhile, spot rates from Asia to the US, recorded by the SCFI, were stable this week, at $3,841 per 40ft for the US west coast and $4,619 per 40ft for east coast ports, as carriers postponed planned mid-month GRIs (general rate increases) in the face of pressure from Chinese and US regulators.

However, given the continuing strong demand, carriers will look to roll out another GRI next month. Hapag-Lloyd said this week it would defer the introduction of its whopping $1,200 per 40ft GRI until 15 November.

Commenting on the situation for US importers, Jon Monroe of Washington state-based Jon Monroe Consulting, said spot rates had spiked to around three times higher than the contract rates enjoyed by the big retailers. But he suggested that even household name retailers were “feeling the pain” as their containers that fell outside the contract had incurred “the incredibly high FAK ocean freight rates”.

Elsewhere, the North Europe component of the SCFI eased back, by $65, this week to $1,084 per teu. However, spot rates are 86% higher than a year ago, with anecdotal reports to The Loadstar suggesting rates could go up again in the coming weeks as equipment and space availability was still “tight”.

On the Mediterranean route, the SCFI ticked up a further $38 per teu this week, to $1,239 per teu, some 40% higher than the rate recorded in May.

Although space availability on sailings from Asia to Europe has improved since the Chinese Golden Week holiday, an acute shortage of equipment, particularly 40ft boxes, remains a major problem.

“If you can get a vessel booking there is no guarantee that the carrier will have an available empty at the depot,” one Shanghai-based NVOCC told The Loadstar this week.

And Ryan Clark, co-owner of UK-based forwarder Westbound Logistics, said that there were still major problems in the supply chain.

“Space is still an issue. We’re getting boxes away but rollings are rife,” he said. “We’ve also been massively affected by clients’ boxes being diverted and delayed via Felixstowe. One customer this morning doesn’t want to pay for his import because an OOCL vessel has changed ETA four times and been delayed by three weeks.

“Yet another example of the fires we’re constantly having to put out.”

Source from: https://theloadstar.com/ocean-rates-still-rising-alongside-major-problems-for-those-on-the-front-line/

Posted on in Transport

Air freight: why are some goods charged by volume and others by weight?

We know that cotton of the same weight is much larger! Goods such as cotton and sponges are light in weight, but they take up a lot of space. If they still charge according to their actual weight, the air transport company will face the risk of bankruptcy.

Air space is fixed, so the charge for air freight is bound to be based on the weight of the cargo.

What does the airline charge?

The airline charges the freight according to the chargeable weight. To understand what is billable weight, the first step is to understand what is volumetric weight. After the volume weight is calculated according to a certain conversion coefficient (the actual volume of the goods ×167), the volume weight is compared with the actual weight to select the major measure. This is the basic charge standard for air transportation.

For example, for a cargo of 1 cubic meter, its volume weight is equal to 1 cubic meter ×167, or 167KG, while the actual weight is only 100KG. However, when the cargo is transported by air, 167KG will be charged to the airline. If the actual weight of the goods of 1 cubic meter is 200KG or even more, then the charge will be made based on the actual weight, which is called “option charge”.

What are the common measurement methods in air transportation?

Actual weight:

A-W or AW, Actual Weight.

Volume weight:

Volumetric Weight or Dimensions Weight is calculated based on the actual size of the cargo and by a certain coefficient of translation. In air transport, the conversion system is generally 1:167, or 1 cubic meter (CBM) approximately equal to 167KG. (the volume and weight are also calculated according to the length (cm) × width (cm) × height (cm) ÷5000, which is not common. Generally, only express companies use this algorithm.)

Charged weight:

The Chargeable Weight, C.W. for short, just as its name implies, Chargeable Weight is used to calculate the Weight of the freight, Chargeable Weight is either actual gross Weight, Weight or volume.

Cargo:

Goods weighing less than 1 kg per 6000 cubic centimeters or less than 1 pound per 366 cubic inches or less than 1 pound per 166 cubic inches. The bill weight is its volume weight.

You can keep this in mind, because the airline needs to take out cargo or heavy cargo to fit the cabin, to balance the cabin weight to meet the take-off standard. If your goods are very bubble or very heavy, you can find the master in the transport to the airline for a more favorable rates.