With the arrival of the peak season, freight demand from Europe and the United States is pouring in. However, there is a backlog at foreign destination ports that cannot return empty containers in time, resulting in a shortage of export containers in Asia.
The impasse, which has delayed Asia’s major export trade for weeks, has been exacerbated by a series of weather- and epidemic-related incidents and operational mishaps.
The freight rate from Asia to the United States jumped to US$32,000
Someone Shipping lines quote shippers that shipping a standard container from Shanghai to Los Angeles will cost $32,000. While this is a unique offer — primarily for customers requesting large backlog boxes shipped at once — it illustrates how desperate some shippers are currently and how selective carriers are with their customers.
Recently, the Freightos Baltic Daily Index has adjusted its method of tracking ocean freight rates, integrating the various premiums required for bookings for the first time. The inclusion of surcharges significantly improves transparency into the actual costs paid by cargo owners.
According to the adjusted index: the freight rate from Asia to the West Coast of the United States is 18,345 US dollars/FEU, six times higher than a year ago; while the freight rate from Asia to the East Coast of the United States It has quadrupled to $19,620/FEU. Asia-North Europe freight rates climbed 4% from last week, more than eight times from a year ago and more than 2.5 times from the beginning of the year.
High freight rates have exceeded the affordability of some shippers. For low-value items such as wooden assembled furniture, orders were stopped when shipping costs rose to about $1,400. Customers have to make very difficult decisions about which goods to part with.
To some extent, some companies are simply priced out of the market.
The pain for shippers is likely to intensify as carriers begin charging port congestion and demand surge fees while limiting intermodal bookings as the traditional peak season approaches.
For example, starting in mid-August, container shipping company Hapag-Lloyd will impose a surcharge of US$5,000/FEU on eastbound trans-Pacific cargo, and other carriers are also officially Implement similar charges.
Due to the excessive shortage of space on the Asia-North America West Coast route, most shippers have to use some unconventional means, including using personal relationships, to obtain space.
80 container ships waiting for berths! The peak season will be a deadlock
Logistics consultant Jon Monroe warned last Thursday: “Now we have a large number of charter carriers putting ships into operation on the China-Pacific Southwest route, with At the same time, large shipping lines are adding additional loading vessels. The West Coast is expected to be hard hit throughout August. We are facing a deadlock phase in the peak season.”
According to the Port of Los Angeles signal platform According to the latest data on July 30, the current situation in Southern California is not optimistic. There are 17 container ships anchored at the anchorage and 12 container ships waiting to be anchored outside the port.
The average waiting time for berthing increased from 4.6 days in the previous period to 4.8 days.
According to statistics, approximately 80 container ships are waiting for berths at anchorages in ports on the three major coastlines of the United States (Western United States, Eastern United States, and Gulf Coast), including Los Angeles and Seattle. , Savannah and Houston ports.
When will it end?
People in the logistics industry generally believe that this situation will not ease until the Spring Festival in the Year of the Tiger. Unless consumers are worried about inflation, or there is external intervention to slow down the economy, a ‘pessimist’ said.
If demand does not decrease, the market may not change until at least the middle of next year. But ultimately, it comes down to when a new price equilibrium will emerge. This is not a capacity shortage issue, but an infrastructure capacity issue.
Before entering the peak season, the capacity of the Port of Los Angeles was already as high as 160%, so no matter how many ships are added, the problem will not disappear. So, with infrastructure unchanged, real improvements will only be seen if demand falls by 60-70%.
In order to minimize ship waiting time, logistics companies are also urging customers to book space 8 weeks before planned departure. According to a fact sheet on a logistics company’s website, retailers who need to have products on shelves by November 1 should ensure they are shipped to the East Coast by August 21 and shipped to the West Coast by September 3.
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