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Global Supply Chain News: After Torrid Year, Ocean Container Rates Expected to Head Still Higher

 

Spot Rates Spike Pushing New GRI for Contract Container Moves

 

 

June 1, 2021
SCDigest Editorial Staff

The China Containerized Freight Index, which is based on an average of spot rates coming out of China to ship a 20-foot container cross 12 representative trade lanes, stood at 2296 at the end of last week.

Supply Chain Digest Says...

 

German carrier Hapag-Lloyd is reported to be planning to assess a whopping $3,000 per 40-foot container general rate increase (GRI) on Asia to US container moves starting in mid-June.

 
 

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That is up from a value of about 1000 a year ago, meaning average rates are up about 120% over that period – but that’s across many lanes.

Another measure of rates, the Freightos Baltic Index, shows the spot rate between Asia and the US east coast at about $7,400 per 40-foot container at end of last week. That is up about 175%% from the rate of about $2700 a year ago.

From China to the US West Coast, the costs for shipping a 40-foot container was about $5400 last week, versus arRaound $1800 a year ago, an increase of 200%. (See graphic below.)

But as container shippers well know, the reality is that many customers are paying far more than these rates, with carriers commonly levying extra charges such as space guarantees, which can easily reach $1,000 container.

“The actual price for a 40-foot high-cube shipment from China to the UK is now $13,000-$14,000, and I think it is possible we will reach $15,000,” one UK forwarder told TheLoadstar.com web site last week.

That same forwarder said that the extremely high cost of container shipping has led a growing number of shippers to cancel booking because the costs take the margin out of their customer orders.

 

Container Shipping Rates from China to US West Coast for 40-Foot Container

 

 

Source: Freightos Baltic Index

 


Fat times for container carriers, right? Yes, but they are hardly done.


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For example, German carrier Hapag-Lloyd is reported to be planning to assess a whopping $3,000 per 40-foot container general rate increase (GRI) on Asia to US container moves starting in mid-June.

What’s more, The Loadstar reports that other carriers are preparing a new set of GRIs and/or peak season surcharges for transatlantic shipments, ranging from $500-$2,500 per TEU.

The soaring spot rates also have a major material impact on shippers and forwarders relative to longer term contracts.

“This leaves stressed shippers facing increasingly one-sided negotiations and, even when contracts are signed, the potential of rolled cargo and broken agreements as operators take advantage of massively lucrative spot rates,” said Patrik Berglund, CEO of ocean and air freight benchmarking firm Xenata.

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