Freight rates from China are still high due to a shortage of containers — and it’s not likely to get better until the end of the year. Freight rates of between 16000USD and 20000USD per 40ft box are now being talked about for the China – UK shipping routes. The is an astonishing 10 times would normally be paid around this time of the year.
Driven on by container shipments from China which are at their highest levels ever, and that’s helping to drive up freight rates. However, the demand for containers is growing so rapidly that the global supply of containers isn’t able to keep up with demand. The result is sky-high freight prices.
The only way to solve the container shortage is to increase the amount of containers being produced, and that’s a problem because there are only a few container manufacturers in the world. The shortage isn’t going to disappear overnight as even if more containers are introduced into the shipping lines equipment pools they still have to be transported to the areas which have the equipment shortage.
Further compounding this issues are the amounts of container ships moored off the coast of San Francisco all waiting for a berth to offload. The anchoring of these ships has caused the San Francisco Bay to become one giant floating port. The anchoring of these ships is also contributing to the container shortage.
Covid outbreaks in the China Ports are also continuing to disrupt the loading and unload of vessels resulting in considerable delays in getting loaded containers out of China and empties back to the China Factories. The Chinese government is trying to speed up the unloading of containers to the ports so they can get the containers out of the ports and into the factories. However it has had limited impact on the overall freight rates.
For now all that shippers, freight forwarders and buyers keep hoping that the worst is over and that rates will finally begin to fall. However all indication is rates will remain above normal until after Chinese new year 2022.
Tags: FREIGHT RATES
Announced in today’s 2021 Budget the Humber area going to be one of eight new Freeports. This includes the ports of Immingham (ABP and ABLE), Grimsby, Hull and surrounding areas. Additionally the Able port is receiving further funding allowing it to further get the port developed. While the UK has had Free Zones in the past which was aimed at regeneration or to encourage specific business sectors to become established, Freeports exist mainly to appeal to business which import goods, have them undertake some process, then re-exported.
The Freeport allows goods to be imported and exported under an much simplified customs system and allows the deferment of any taxes indefinitely which assists the traders. Traders can work on the goods and re-export them without having the financial burden through having to pay the taxes on arrival or giving financial guarantees. For traders importing large volumes / high volume goods this can have a significant benefit to the trader’s cash flow position. The trader will be able to either complete the customs declarations themselves or use an agent such as AJF.
The Freeport is suppose to become operational sometime in the autumn of 2021. Hopefully this Freeport will be much more successful going forward then the Freezone’s which existed before in between 2006 and 2012.
2021 has begun and it looks like it is going to be another year of issues in the logistics sector. To start off with it appears that container rates from China to the UK are attempting to beat bitcoin for the fastest increase in spot pricing. Currently container rates for sailings this week and next week are at 11500USD per forty foot container about 9000USD more than normally expected. LCL pricing is seeing similar with peak rate surcharges over 200USD per cubic metre. This pricing has topped anything ever seen. Despite this enormous price increase China agents are still advising that space needs to be booked as soon as possible due to reduced sailing schedules to the UK. At the moment it still looks like it will be February before things settle down and may well go into March/April if the ports do not get themselves sorted out.
Lines such as CMA-CGM have been forced to suspend calling at Felixstowe due to the on going congestion situation. The delays at Felixstowe were becoming so bad that the vessels where beginning to bunch up at the UK end and then when they finally berthed they discharge and reload was slower then normally. This has been impacting the overall line schedule. Containers for the UK are being left in Rotterdam for eventually transshipping into the UK. With the volume of containers involved the actually transshipment date and finally arrival in the UK can be up two weeks from the original ETA. Shipments which are making it to UK ports are constantly being delayed from their original eta’s. We have had shipments arriving 10days later than originally planned, which is then resulting in haulage being cancelled. Congestion issues are not just limited to the UK with LA and Long Beach in California,USA both experience serious congestion. Most vessels arriving at either port are having to wait for a free berth at anchor.
BREXIT has finally happened with the UK leaving the EU at 2300hrs on Thursday December 31st. Within the last few days of 2020 a trade agreement was reached which meant most goods will continue to move between the two trading areas without any tariffs. Shipments have continued to move across the borders without any significant issues. In fact the biggest issue was when the French banned all incoming traffic from the due to the COVID virus which resulted in complete chaos just before Christmas. This took over a week to get fully resolved so it is perhaps fortunate that a trade agreement was reached.
Despite the fact that a trade agreement has been reached, imports and exports to the EU will now need a full customs entry to be done. This means shippers and consignees need to ensure all their paperwork is in order. The majority of goods being imported from the EU will not attract any additional duty due to the trade agreement which means there will be no actual increase in price for the goods but there will be additionally charges in handling the customs paperwork.
Everyone need to be aware of the continuing issues with shipping from China to Northern Europe particularly the UK. Rates have increased to a level never seen before and at a break neck speed. 40ft containers from main China ports such as Yantin, Hong Kong, Ningbo and Shanghai in July where around 2000usd per container. Sailings in the last week of December rates are around 9000USD per 40ft container. This is almost a 5 time increase in cost and for price sensitive goods this is very bad news. For many shippers this can actually swallow up all the profit on their products making it a stark choice of not shipping or having to increase prices dramatically to offset these rises and hoping their clients are will to pay the increase.
In the UK the problems began with the Port of Felixstowe severely underestimating the bounce back in demand and the amount of PPE containers coming through the port. Severe congestion led to shipping lines re-routing to London Gateway and Southampton. These ports rapidly then become congested as well. A shortage of haulage and PPE containers staying on quays longer than normal resulted in vessels leaving the UK without the normal amount of empty containers on them. This resulted in equipment shortages within China main ports. The large port delays for getting a berth and unloading vessels (7-10 days) has resulted in many shipping lines having to cut out UK port calls and discharging all containers in other European ports such as Rotterdam. The situation has got so poor in the UK that some of the shipping lines have been refusing bookings and putting more pressure on the space that remains out of China. As mentioned earlier the above normal container imports have resulted in mass shortage of UK haulage, with it being necessary to book haulage 3 weeks in advance just to secure a slot.
Co-loaders (those who offer services to move individual pallets as LCL freight) have been reporting that all of their spaces has been used up and they are having to buy space at market spot rate. The result is the have had to pass the massive rate increases on and there are now surcharges as much as high as £100GBP per cbm to UK ports. This is on top of the normal sea freight charges. Some co-loaders are having to refuse to take large volume bookings from new customers (who are unable book full containers directly) or are charging a further surcharge in order to ensure they have shipping space for existing clients.
What can a shipper do? For many shippers who can manage without stock then it is a waiting game. These issues are expected to peak around the Christmas and New Year period with several shipping lines having some sailings suspended. However large disruptions may well continue on to around the Chinese New Year in February. After this vessel schedules will have returned more to normal, along with container equipment flowing back into China there will be more space available. Rates will then begin to fall, hopefully at the same speed as they rose. Until the Covid crisis is finally brought under control by the new vaccines shipping rates may remain much higher in the first half of 2021 compared to the first half of 2020. Shippers should also try and ensure that get at least 7 days free quay rent and 10 days container detention time. Often Chinese freight rates only have 5 days free storage which is one reason they are often cheaper than UK sourced rates. At the moment money saved on freight is often offset by high quay rent bills, so all shippers should be aware of this.
If you are looking for a supply of containers on the continent for shipping into the UK and Ireland, we have a large quantity of shippers own equipment including 20ft and 40ft containers available. Our equipment is available in Antwerp, Rotterdam and Hamburg with smaller quantities available in other continental ports. Let us know the number of containers you require, we will arrange the release of them to your own transport and notify you where they can be returned to. All of our containers are all fully plated and checked to ensure they are all clean and in good condition.Suitable for shipping machinery and other project cargo, vehicles, palletised goods where the use of standard trailers is either not practicable, goods are at risk of higher damage in transit or secure enough.
While normally most clients prefer to arrange their own transport. If you require us to hand the actual logistics we can arrange both the collection,sea-freight, and delivery to site or just the sea-freight section. We can offer shipping services into Grangemouth, Teesport, Hull/Immingham, Tilbury, Bristol, Liverpool, Belfast (Northern Ireland) and Dublin(Ireland).
In addition to one off shipments our containers are suitable for long term projects where the goods need to be stored securely and protected from the weather on site pending final call off. Long term hire can be negotiated depending on the length the containers are need for, at rates much below any shipping line would charge for them. A further option is containers can be also be purchased from us with a buy back option.
If you want more information please use the contact us form or ring us to speak to us directly.
The situation at the UK main ports can only be described as nothing short than complete chaos. Port of Felixstowe severely under estimated how much traffic would come through the port after the initial Covid 19. This has had lasting impact on trade which has resulted in berthing issues and slow discharge of vessels. Combined with a shortage of transport has meant containers having to have the haulage booked over 14days before arrival in order to get a delivery slot. Even doing this is difficult as vessels find they have no berth on arrival and so either wait or the shipping line having to change their port rotation meaning, or being slow to discharge. This all means containers which have had the freight booked out in China are regularly running out of free quay time due to most only having 5 or 7 days free rental.
Even when hauliers have got a Vehicle Booking Slot (VBS) they then end up having to wait may be a couple of hours on the quay to get their container loaded or off loaded. This then results in delay to customers warehouses, which in turns delays the next job the haulier has planned. Overall the delays progressively get worse and worse throughout the week and then start again the next week.
This has not just effected full container load shipments but has had a significant impact on LCL operations through Felixstowe. Normally LCL shipments are devanned within a few days of arrival. It is now taking up to 14days for containers to be devanned at Felixstowe/Ipswich ERTS and the delays keep building up as the consolidators struggle to get their containers off the quay.
Just to compound all of this the strong winds we have had in the UK over the past few weeks has made the situation even worse as the ports have had to shutdown all operations,which has added even more berthing and loading issues. As a result of these issues at Felixstowe more and more container traffic has been diverted into London Gateway and Southampton. These ports are struggling significantly due to the increased volumes. This has lead to some shipping lines and consolidators introducing or planning to introduce congestion charge fees. These can be as much as £150 per 20ft Container (so £300 for a 40ft or 40ft HC container).
Customers should be aware that despite this issue being entirely down to the ports being unable to manage the shipping traffic they will still be charging demurrage and other related charges which will unfortunately have to be passed on to you. There is no ability to claim back any of these charges from the ports. Several freight forwarders have been in contact with BIFA to see if they can intervene in the situation but they have been so far had little success in being able to get matters to improve.
For both importers and exporters in the North of England the alternative use the less congested feeder ports such as Immingham, Liverpool and Grangemouth. While it adds additional transit time of around 5 days and extra cost this is easily now being offset by all the delays and charges at these ports. Use the contact form to send us details and we will see how we can assist you.
The 2020’s started out as going to be the decade in which going green was the only way forward for logistics companies. Decarbonisation and reducing the environmental impact of company’s supply chains looked like would feature as a major part in business plans. Companies in the logistics sectors choosing to adopt a going green plan seem to have many advantages despite the additional expense.
Then we entered the Coronavirus crisis which has within a few months has change the world completely. It will be interesting to see if the long term Coronavirus impacts the sectors green credentials. If we enter a long world recession which may mean lower oil prices. This then has a knock on effect of reducing the demand for replacing internal combustion vehicles with zero emissions vehicles. While the green reform momentum started in the previous decade at lease has credit a solid base and it may well mean that we have reached a tipping point that there is no going back to the old polluting ways. Already several shipping lines have decided to take advantage of the lower oil prices and transit from China to Europe via South Africa. While this is a longer route, the shipping lines can avoid having to pay Suez Cannel Fees. However this means much more emissions per voyage from the vessels but this is an example of economic benefits outweighing the environmental ones.
IKEA have publicly said they will not be shipping on any service which takes this route as it will impact the company’s public green credentials. All their cargo must be shipped on the shortest most efficient route into Europe to reduce their emissions. This is probably one of the first times that a large shipper has used environmental impact factors in their supply chain choices. While no other large shippers have taken any similar action, it does show that some companies regard how the public see their handling of their environmentally impact is important.
With governments around the world looking to stimulating their economies, green technology and green infrastructure projects are going to be ones which start to get much more attention and investment. In Stallingborough, UK final planning permission has been given for the go ahead of a fuel production facility which uses household waste as its source material. The facility is being developed by a specialist company called Velocys, but has backing from industrial giants including Shell and British Airways. Despite planning permission being given it will be a least a further 2 years before construction starts and it is estimated the plant will not be online until the middle of the decade. However the fuel produced is planned to be used in both the airfreight and trucking industry helping to reduce their impact while reusing waste which would normally be buried in the ground.
This is our 20th update highlighting issues the Covid-19 virus is having in the world of logistics and supply chains. In general news the UK is continuing to re-open with pubs, hairdressers, cafes can re-open from the 4th July and it looks like in a few weeks you will be freely be able to travel to many countries around the world. This is despite Leicester having to go into a local lock down due to an increase in cases, and it is possible that several other cities face the same prospect in England. It may turn out that all the restrictions being lifted have to be put back in place. Worldwide the virus is still continuing to cause havoc. Brazil is very badly effected and is struggling still to get the virus under control. Despite this the country is reopening as it simply cannot afford to keep lock down running. The USA is also facing a continuing increasing number of cases. California has reversed recent openings with bars and indoor dining areas being made to close again. Cases have significantly jumped in this region over the past few days.
Returning to the world of logistics the China authorities have released figures for rail freight from China to Europe. It showed that in April alone there was an almost 50% increase on the mount of train movements compared to 2019 and May shows a similar figure. While these services have been running for almost a decade it appears that the Covid-19 crisis has finally brought them to the attention of a much wider range of supply chain planers and it is expected demand though not continuing to double once this crisis is finally over they will continue to capture freight which would have previously move by airfreight or by ocean freight.
Aircraft belly freight capacity is likely to begin to rapidly increase along certain trade routes around the world as governments lift restrictions on passenger flights, and airlines begin to reinstate services. The UK is going to announce this week all the countries from which people can return from and not have to go under go 14days quarantine. This will no doubt trigger a massive stampede as people book holidays. The virus may be as hazardous as before but the majority of people are more than willing to risk the own lives, if the alternative means delaying holidays for a few months. This does mean freight capacity will be increasing, whether this will just mean a decline in airfreight rates as the capacity bottleneck eases and there is no additionally freight to fill the capacity or manufactures will increase production to fill the additionally capacity is going to depend on how severe the expected economic downturn is going to be.
Shipping lines are still increasing container freight rates on trade lines,particularly those to North America. General rate increases (GRI’s) are ranging from 200USD per TEU to 400USD per TEU which is a considerable surcharge. This is all down to the PPE demand once again impacting on capacity and making non-PPE goods shipping costs much more expensive than in 2019. With the coronavirus still having a significant effect in the USA this is demand is not going to disappear in July.
In our nineteenth update on the effects of coronavirus we are once again covering the impact on the logistics and supply chain sector in the UK and around the world. England has now moved into full post Covid recover. Most shops have now re-open and there are plans in the next couple of weeks to allow cafes and bars to reopening. The UK government is rumoured to be preparing to drop the social distance from 2m to 1m with the next couple of days. Both Scotland, Wales and Northern Ireland are also decreasing their lock down restrictions. This does not mean the pandemic is over however, with other countries are still having major problems and reporting increasing cases. The USA has had large increase in cases in the “Sunshine States” as lock down was reduced, and other countries keep having localised groups of cases. This is showing it still possible for there to be another full second wave of infections in any country.
Ocean container freight demands are impacting pricing again on trade routes. 40ft Container rates from China to the West Coast USA ports have reach rates not seen for over 2 years, with East Coast rates following a similar pattern. However Europe is a different story with demand and supply more matched and rates on some routes have begun to drop slightly. This may be just a short term price movement or an indication of a longer down turn in rates as demand softens, but it is to early to say. Seafreight into India is still facing major issues with the main lock down being extended until the end of June. Non essential cargo which is being devanned in some port CFS warehouse are incurring long delays due to a shortage of staff, lack of vehicle operators and congestion. This is resulting in additional charges for LCL operators which is being passed onto consignees. There is little that can be done to avoid these delays at the moment other than avoid shipping non-essential goods into ports such as Mumbia for the moment. The issue will eventually be resolved as the Covid crisis here is managed.
Airfreight rates have gone lower and demand for space has dropped this week mainly due to declines in PPE equipment shipments. However despite this anybody thinking of being able to get a “normal” airfreight rate out of China to either Europe or North America is going to be disappointed. Rates are still well above what was being paid this in June 2019. Several companies which analyse airfreight movements have report that overall capacity has actually dropped as some airlines have pulled freighters from certain routes as there is less PPE equipment to be moved. If there is a second wave of infections or the the existing ones worsen then it may result in another sudden freight rate increase and no airfreight capacity.
Companies are encouraged to rethink their supply chains to allow for disruption in logistics due to sudden demands for PPE equipment if new waves of Coronavirus break out. Importers and exporters should be now getting their logistics or freight forwarders to offer full analyse of different routes which will enable the to keep goods moving even if PPE shipments take all capacity of a particular route so they can avoid having to attempt to move urgent shipments using costly ways or having to shut down as they have no parts to use or stock to sell. The post Covid-19 supply chain world will be different.
Welcome to our 18th update on the impact the Coronavirus is having on the logistics and supply chain sector. In non related logistics news, the UK number of reported deaths and cases has continued to fall. In the UK from Monday most shops which were classed as non-essential and so have been shut since the start of the lock down are being allowed to re-open but have to ensure their customers maintain the 2m distance rule. Other countries within the EU have continued to lift restrictions, several now allowing unrestricted travel between other EU states, with Greece allowing travellers from certain countries worldwide such as Japan in. Countries which are heavily reliant on tourism are desperately hopping that they can still salvage part of this years tourist season. Further afield India is still struggling to manage to contain the virus with cases still increasing. Places like Mumbai have been badly effected with higher rates than national average. It is hoping that increased testing and tracking will bring the virus under control. India cannot afford to have a further lock down so has to explore other ways of eliminating the virus.
Logistics is continuing at the moment to show increases in some sectors. China has released data that in May over 7 billion parcels where delivered representing over a 40% increase in deliveries compared to the previous year. Courier traffic in the UK is the one area which has shown a massive increase over the past three months. Last month alone courier traffic was up by almost 45% compared to the previous year. Supply chains dealing with products for home consumers have been busy in this period than the in the traditionally run up to Christmas. Most companies who had an online presence showed an up tick in sales, the biggest limiting factor has been the ability to get new stock in. It has been reported by several buyers that they are no longer able to source for certain factories in China as they have not re-opened. This has meant searching for potential new suppliers and then trying to get them integrated into new supply chains as quickly as possible. Buyers are finding suppliers have been cutting corners and skipping proper quality checks on products in order to try and catch up with the back log of orders. Those buyers which had already built proper independent quality checks into their supply chains have benefited in knowing the products being shipped out will be suitable for sale.
Ocean freight demand has remain fairly static over the past week, with still large demand for container space out of China which is helping to keep rates up, along with the reduction in capacity due to blank sailings by most of the shipping lines. Worldwide reductions in capacity for container traffic in June are expected across all trade routes and with a couple of exceptions some European trade routes all others worldwide trade routes are expected to have no changes in shipping rates or increase have slight increases. One charge which is appearing more and more from shipping lines on certain trade routes is an “Equipment imbalance charge” which has been added to cover the cost of re-positioning empty containers where demand has dropped off for shipments to that location.
Airfreight rates have continued to drop slightly, however demand is still high and while many airlines are now using passenger planes as cargo carriers the lack of belly freight is still a big issue. According to IATA is still expecting a bleak future for some airlines, but does see the increased airfreight demand to hold into 2021, with many industries using airfreight to meet sudden demands for certain goods and to control the amount of stock they need to hold if the world does enter a full recession towards the end of 2020.
AJF is here if you are a shipper or importer into the UK. Wether it is normally goods or PPE equipment have a variety of routings and costings available. Use our contact for to send us details an we will see how we can help.