Sea Freight Update
6th August, 2021
Imports
The upward spike in ocean freight rates has and continues to be damaging for many importers. While shipping lines report Billion dollar plus profits, importers are left with working out how to factor the increased freight charges across the cost of goods and what if any of the increases can be passed on. This is causing particular angst for lower cost goods with the percentage increase per unit being significant.
A few examples to digest are 40’ rates ex Shanghai to Sydney pre pandemic were USD800.00 to USD1000.00 per 40’, we are now sitting at USD8300.00 to USD8500.00 per 40’. Spare a thought for our friends in the UK who are paying USD23000.00 for a 40’ container, this inflated rate is causing some companies to go out of business in the UK.
An analysis of industry news and updates is indicating that the rates and space challenges are set to continue throughout 2022, there are new vessels under construction which will add capacity to the global supply chain but the first of these is not expected to hit the water until 2023.
Covid outbreaks at ports are also having an impact, for example the port of Yantian in China had to close for a week which caused the re routing or delays off port of +300 vessels. With many countries now back in some kind of lockdown the ability for ships managers to swap crews is a problem, a crew change crisis is not too far away with many ship workers having been at sea for an excessive amount of time and requiring a change.
Please also remember that we move into BMSB season as of 1st September which will have further implications for many products from various origins. Please refer to our post or contact our Customs team to ascertain if your product is affected: 2021-22 Brown marmorated stink bug (BMSB) seasonal measures – Southern Cross Cargo
China
The relentless increase in rates looks set to continue with shipping lines announcing another general rate increase (GRI) of USD750.00 per 20’ and USD1500.00 per 40’ effective 15th August. Many carriers are reportedly not honouring contracts or space allocations in an effort to push more customers to the FAK market rate. At SCC we are experiencing a few delays with FCL bookings however overall cargo is continuing to move in spite of the challenges. A huge thanks to our China partners for their outstanding work with securing space for our import volumes. With rates being fluid and space taken so quickly it is critical that our team has the ability to make decisions quickly on taking a booking on your behalf. We have a few ways that reduce the dialogue on rates and a booking that are proving to be successful for our customers and a key to getting a booking. For any importers ex China to AU we would welcome a discussion on how we are currently working with our customers to tighten the booking process and give you some certainty. Importantly as always ex China we are seeking direct sailing options only, however many carriers are seeking to adjust rotations and port calls in mid transit.
USA
Similar to air freight delays the USA has a backlog in Los Angeles. The USA has seen a huge surge in imports as a result of consumers spending from their lounge chairs during lock down and off the back of regular USA Government stimulus cheques. This surge, combined with port congestion has also caused extensive delays to movement of containers. USA exporters are experiencing some issues with the securing of equipment particularly the availability of chassis. There are also extensive rail delays and new surcharges being added to rates where intermodal connections are required. Current rates ex China to Los Angeles are in excess of USD15,000 per 40’, USD22,000 per 40’ to Chicago which will likely see a price hike on export products where components are sourced internationally. For USA sea freight, we are advising adding at least 2-3 week buffer for your bookings.
EU
Rates are up and space is tight, we are securing bookings OK, however we do require early notice as soon as possible in any pending shipments please.
NZ
Very tight for space, can be a 2-3 week delay to secure a booking.
Exports
There are some significant delays for sea freight exports from Australia, particularly on sailings that require a transhipment. Transshipment ports such as Singapore and Port Klang significantly back logged shipping companies are being advised by HQ that they cannot load vessels to capacity as the transhipment port is full beyond capacity. There is already more than enough containers on hold at these ports that are ready to be loaded onto the connecting vessels. The most extensive delays seems to be to the subcontinent with some exports to India, for example having a 6 week booking delay. Forward planning in exports has never been important for our Australian exporters.
At SCC we are proud of the fact that while we have had to pass on the increases from the service providers, Southern Cross Cargo has sought to ensure that we do not increase any of our administrative or handling fees in an effort to support our clients during this pandemic. We are an extension of our customers business and we will always do whatever we can within our control to support our fantastic customers.
Please don’t hesitate to contact us at sales@sccargo.com.au for any assistance.
