Monday 13 July 2015

Importing from Asia to the UK? On top of your freight costs?

If you import from Asia, and if you're concerned about keeping a lid on your landed freight costs, then now would be a good time to take a close look at what rates you are actually paying as we've seem some historic lows in rate terms over the last few weeks in the freight indexes from Asia (USD 205 per 20 foot container from Shanghai to UK).

That sounds like an amazingly low freight cost, especially as your after arrival costs would probably be in the region of GBP 600-700 (depending on your location in the UK. However these rates are now a distant memory (30 days is a long time in logistics and freight forwarding) and as we approach the start of the Peak Season as it's called (say August-November) when retailers need their Christmas stock on the shelves from September onwards, volumes increase and in turn, freight rates.

The shipping lines can't make money at rates as low as USD 205 so they instigated General Rate Increases (GRIs) from 1-July and they had a dramatic effect, with rates bouncing by over 300 percent in 2 weeks (from USD 205 to USD 879!).
Last Friday they eased back a little, but this is the calm before the storm in my opinion as the lines have announced further massive increases from August 1st of USD 1000/TEU/20 foot so even though some commentators are saying the rate increases will fail, I am not so sure as lines are also withdrawing capacity by reducing the number of vessels in service or just reducing the sailing schedules.

Some customers, particularly large ones with +1000 TEU of volume may have done fixed term deals (say 6 months, 12 months) however the index was USD 1085/TEU on 2-Jan-15 so they may have regretted the decision to fix their rates especially as the rates have been generally weak since Chinese New Year.

Just imagine having a fixed rate of say USD 900-1000/TEU/20 foot and hearing that the market rates have fallen down as low as USD 205! I suppose that's a risk you take but maybe what you really need is to seek some independent expert advice so that you can keep your landed costs as low as possible and preserve your margins in these testing times.

At Straightforward Consultancy (SCL), we're managing the freight portfolios of many customers and securing better deals and service than they could on their own which is why we're so highly rated by our customers. Just check out our website testimonials or case studies to see why we would be a real asset to your team.

It'd be great to hear from you and as we say on our website, a consultation costs nothing and you're bound to learn something!

Until the next time.

Andy Cliff
Director


Straightforward Consultancy Ltd – logistics simplified
4, Beckett Drive
Winwick Park
Warrington
Cheshire
WA2 8XJ

Tel : 07934 443492
Email : andy@straightforwardconsultancy.co.uk
Web :
www.straightforwardconsultancy.co.uk
Blog : http://straightforwardconsultancy.blogspot.co.uk/
Twitter: @AndyCliffSCL
Linkedin:
https://www.linkedin.com/in/andycliffscl

No comments:

Post a Comment