Shipper Fury as Spot Rates Soar and Carriers Ignore Contracts

By Gavin van Marle (The Loadstar) –

The sense of genuine anger amongst North European shippers and freight forwarders was palpable this week as they struggled to digest rapidly escalating spot freight rates.

The ascent steepened over recent weeks, with Drewry’s WCI Shanghai-Rotterdam leg rising 20% week-on-week to finish at $4,999 per 40ft.

However, sources told The Loadstar that slots were being purchased at much higher levels.

“Real terms rates for spot are in the $6,000-$7,500 mark, with carriers saying they will hit $10,000.”

Tight vessel supply is continuing to combine with high demand in trunk trades and has led to a worsening shortage of containers at key export hubs in Asia, as The Loadstar reported earlier this week, and which is now having a significant impact on secondary trades.

But carriers’ preference to carry higher paying spot cargo over contracted volumes is infuriating many customers.

One European import manager suggested the recent hikes would likely force it to suspend shipments once its current bookings are completed.

“The carriers don’t honour anything but their profits – we’re loading/shipping out the stock that’s currently on production lines, then we will cease again, and we’ve already informed our suppliers and partners.

“Personally, I believe it needs manufacturers to lobby their officials and shippers to cancel orders. All professional shippers understand and totally accept the lines need an operating profit.

“But this flippant nonsense is no good for any party, including the lines themselves in the long run – so many shippers have mitigated their production now due to the last hikes during Covid,” he said.

“It’s an excuse, like Covid was,” one forwarder told The Loadstar.

“Is it any more expensive to move a container now than it is any other time? Or is it shipping lines taking advantage of a situation?

“It’s tulip mania. The bubble will burst and then the usual cyclical rate reverberation of collapse and recovery,” he added.

Meanwhile, on the WCI’s Shanghai-Genoa leg, spot rates rose 15% to $5,494 per 40ft.

Similar trends were seen across the market – transpacific rates on Drewry’s WCI were up 18% to $5,277 per 40ft, and up 16.5% on Xeneta’s XSI to $4,689, while Freightos’ FBX Asia-US west coast had prices lower at $4,333 per 40ft, a week-on-week increase of 12%.

Meanwhile, the WCI’s Shanghai-New York leg saw a 13% week-on-week increase to $6,463 per 40ft, while the FBX Asia-US east coast prices climbed 5% to $5,359 per 40ft.

And forwarders on the US trades reported similar problems in Asia – Falcone yesterday warned of a “severe shortage of 20ft, 40ft, and 40ft HQ containers available to be used for export shipments, especially at the ports of Shanghai, Ningbo and Xiamen”.

Port congestion in Asia also appears to be getting worse – an operational update from Hapag-Lloyd said vessels were waiting three-to-four days at both Shanghai and Singapore to be berthed, and between one and two days at Qingdao and Ningbo.

The eeSea liner database currently shows 20 ships at berth in Qingdao and 53 waiting, while Singapore has 51 at berth and 69 vessels at anchor awaiting a berth.

Meanwhile, some secondary trades are now being described as ticking time bombs with the same factors further propelling rates increases.

“There is a ticking time bomb about to go off on Asia-Middle East,” Hans-Henrik Nielsen, global development director at CargoGulf, told The Loadstar.

“The freight rates are going through the roof – we are hiking FCL rates each week. Right now, we are just shy of $4000 per 40ft on China-Jebel Ali, and I have a feeling we could see another 50 % increase by mid-July, if not earlier.

“All sorts of surcharges will start to creep in – peak season and congestion surcharges…we already have the congestion surcharges for cargoes ex-China, south-east Asia and Sri Lanka,” he added.

On the Asia-east coast South America trade, short-term rates recorded by Xeneta have returned to levels last seen in the fourth quarter of 2022, with a current average spot rate of $6,468 per 40ft., although some Brazilian importers are reported to have paid up to $8,231.

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