Container shipping rates from China to Europe rapidly increasing

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.