Asia-Europe Spot Rates Head for Increase as New China Covid Crisis BitesMark
Ocean carriers are rolling out more rate increases, with shipping rates from Asia to North Europe edging towards $20,000 per 40ft. This represents an incredible 1,000% increase on the spot rate for the trade a year ago.
Meanwhile, transpacific carriers are hitting Asia to US shippers on 15 June, with GRIs of up to $3,000 per 40ft, with some carriers now asking $17,000 per 40ft for US east coast ports.
And transatlantic shippers are also feeling the pain of rate hike contagion with week-on-week hefty increases: this week’s North Europe to US component jumped 17%, to $5,069 per 40ft.
For Asia to North Europe climbed a further 5%, to $10,998 per 40ft, however, most of the limited availability carrier rate offers seen this week for UK delivery were around $16,000 per 40ft.
We also are expecting many cancelled orders from China from retailers who cannot shift stock at increased retail prices. Some importers may also be caught in a trap between fixed prices agreed with major retailers and highly elevated freight rates, which could create issues.
UK importers may find themselves trapped, paying eight times more for freight than last year; so insolvencies are expected in 2022. Some import customers are coming to a standstill, and smaller importers like garden centre businesses are going to go out of business.
Also, we are hearing importers are looking to switch production back to Europe, and we are seeing vessel space issues and rate increases on all exports and imports to and from the UK.
The transpacific for the US west coast was up by 10% this week, to $6,106 per 40ft, while for the east coast the index surged by 16%, to $8,716 per 40ft.
Like the Asia-Europe trade, shippers on the transpacific can only aspire to obtain these rates on the short-term market with carriers having no difficulty in filling any available slots at double the spot rate desperate to get the product to the booming US market.
The main driver of the new raft of hefty rate increases across virtually all trade lanes is the Covid crisis at the southern China ports, particularly Yantian, where there were reported to be up to 40 vessels waiting to berth this week.
The Yantian lockdown will have a much larger impact upon the flow of goods in the transpacific than the Suez Canal blockage, importers will be severely impacted as their containers sit in South China for weeks on end with little or no access to vessels.
And when the backlog in China eases, the pressure will still be on the US west coast ports. The consultant said the congestion at southern Californian ports had shifted from shipside to landside, specifically due to rail carriers being unable to clear the terminals of containers. There is also a new issue regarding the railroads and that there are not enough railcars to move the containers inland.
There is no dispute we are in for a bumpy ride over the next few months until we hope that costs will get back to some normality.
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