More pain for shippers as ocean rates soar and carriers load surcharges

Posted on: 6 Nov 2020

port of antwerp Daniël Leppens

Container rates across main and secondary tradelanes are exploding, with no hope of any easing of the pain for ocean freight shippers in the coming weeks, or possibly even months.

Today’s Shanghai Containerized Freight Index (SCFI) comprehensive index value has doubled since May, with several tradelane components recording gains in spot rates in excess of 100%.

This week saw another 9% increase in the SCFI for rates from Asia to North Europe, to $1,246 per teu, and in further bad news for shippers, carriers are now busily preparing further rounds of FAK rate increases for this month and next.

CMA CGM has upped its minimum FAK rate for North Europe to $2,650 per 40ft high-cube, effective 7 November, however several shippers have told The Loadstar they are already paying much higher rates to carriers for prompt container availability and to guarantee shipment.

The SCFI index for North Europe is some 70% higher than on 1 May, and continues its upward trajectory, Normally at this time of year carriers would be trading in the slack season and face a downward pressure on rates.

And shippers have already been advised of fresh FAK increases from 1 December with, for example, Hapag-Lloyd upping its 40ft high-cube base rate, including fuel surcharge for North Europe (excluding the UK), to $3,020.

Moreover, UK shippers are being asked to pay carriers at least another $300 per box on top of a port congestion surcharge.

Indeed, this week Hapag-Lloyd advised its customers that it would apply a $175 per teu congestion surcharge from 15 November on all cargo destined for the three biggest UK box ports of Felixstowe, Southampton and London Gateway.

The only cloud on the horizon for carriers is the impact on demand from new lockdowns in Europe, with many retailers shut for weeks, possibly causing some orders from Asia to be paused or cancelled.

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