30-Dec - latest news on Asia-Europe ocean freight rates - heading towards USD 4000!

Good morning All
Trust you all had a good Christmas break and took a break from the day to day challenges of importing from Asia, or anywhere else for that matter. We've been keeping a close eye on the market as always and it seems that the large rate increases which were imposed mid-December 2013 (around USD 900-1000/TEU) are, as they say in the trade, sticking.

The increases hit the market at USD 600/TEU, driving the market rate from Shanghai to USD 1586, a 61% increase on the November level.

After 2 weeks, they've dropped only around 10% and now stand at USD 1511 so in terms of the big picture, we have moved from a cost of around USD 600/TEU in the low point June 2013 to a market rate now of over USD 1500 (3 x June level), so we're talking about USD 3000 for a 40 foot container. Serious money.

We have now heard through our contacts that the shipping lines plan yet another large increase in early-mid January as space tightens leading up to Chinese New Year at the end of January. If you're not on top of this situation at the moment, please do take action as your costs could spiral yet again and be heading towards USD 4000 for a 40 foot container.

The rates are clearly being propped up by a shortage of container space on vessels as lines withdraw sailings (i.e. capacity) and place importers at risk of "rollovers". These are when a container, booked to sail on a certain vessel, is not loaded (or off-loaded) and then re-booked on a later sailing, naturally causing delays and inconvenience for the importer, who will still be expected to pay the full freight rate!

From our side, we have only seen one client rollover from Asia in 2013 which I firmly believe is a result of our careful management and monitoring of service (and rate) levels, meaning that we step in early with any service issue to get to the root cause.

As always, we're only too happy to speak with any companies who would like to make their import supply chain leaner, more responsive and more customer centric (and let someone else manage it for them!). We have just had two more clients renew for 2014 and have also been appointed to two brand new clients for 2014 so we're really pleased that we're offering a service which is truly valued by existing and new clients.

Kind Regards



Andy Cliff
Straightforward Consultancy Ltdwww.straightforwardconsultancy.co.uk

 

 

Latest news on Asia-Europe ocean freight rate increases & space issues

Good afternoon All

Many of you may know from the bulletins in the logistics press that the shipping lines who operate services from Asia to Europe and the UK were planning a hefty USD 950-1000/TEU (20 foot container equivalent) increase on Asia-Europe for December 15th which has actually settled in at USD 600/TEU, so in terms of the big picture, we have moved from a cost of around USD 600/TEU in the low point June 2013 to a market rate now of over USD 1500 (3 x June level), so we're talking about USD 3000 for a 40 foot container - big money.
 

To add to the woes of UK importers, not only have they suffered large rate increaes, but the lines have withdrawn sailings (i.e. capacity) to help their rate increases to "stick" but the result of this is a big increase in what's called "rollovers".

These are when a container, booked to sail on a certain vessel, is re-booked on a later sailing, naturally causing delays and inconvenience for the importer, who will still be expected to pay the full rate!

From our perspective, we have been either very fortunate, or our customers' containers are treated with some priority as we have only seen one rollover in 2013 (1 x 40HC from of Jakarta, transhipment via Singapore) which I believe is also related to our close monitoring of service (and rate) levels and we step in early with any service issue to get to the root cause.

As always, we're only too happy to speak with any companies who would like to make their import supply chain leaner, more responsive and more customer centric (and let someone else manage it for them!). We have just had two more clients renew for 2014 and have also been appointed to two brand new clients for 2014 so we're really pleased that we're offering a service which is truly valued by existing and new clients.

Merry Christmas to All and have a great Christmas break with your families and put logistics to the back of your mind for a few days!

Kind Regards



Andy Cliff