Sea freight rates and surcharges continue to rise on all the primary trade-lanes, up 10% from Asia in the last week, with no signs of softening in the coming weeks, or months.
Even with some blanked capacity over Golden Week, capacity on the Asia-Europe trade increased 14% year over year and rates were double the levels of the same month last year.
Improving economic activity at both ends of the supply chain, is driving demand in a trend that has continued into the final quarter of the year and which analysts expect to remain positive, despite the UK locking down again.
Economic data indicates a continued strong rebound in output during the month, especially in automobiles and auto parts, which are rising at the fastest rate since January 1998.
With capacity restored, the equipment imbalance is becoming more acute and the elevated rates that we are seeing are entirely demand-driven, with estimates that volumes will remain strong until after Chinese New Year, giving the carriers complete control into 2021.
Reports in The Loadstar suggest some carriers are unwilling to offer shippers quotes for next year, while others are refusing to consider transferring spot customers to annual contracts, which means that unless shippers already have a contract with them, they can only book FAK cargo.
All the signs are that the shipping lines are (unsurprisingly) being assertive and there is little chance that a buyers market will emerge, because even bringing large volumes to the negotiating table won’t bring the pull it usually does, in lowering prices.
Market analysts predict that Asian rates will settle somewhere around the current FAK rates, so double, or even treble, where they were this time last year, with export freight rates seeing similar increases.
The only potential danger for the lines is if the economists are wrong about the impact on demand from new lockdowns in Europe. With many retailers shut for weeks, it is possible that increasing order numbers from Asia could be paused or cancelled.
Shipping line after shipping line have imposed general freight increases and a variety of other surcharges and with this week’s news of a potential vaccination, oil markets have spiked, increasing fears of potential bunker increases.
Moreover, UK shippers are being asked to pay carriers’ additional charges, on top of recently imposed port congestion surcharges.
Metro negotiate rates and volume agreements with a broad portfolio of carrier and alliance partners, to offer our shippers the widest range of service offerings, port-pairings and rates.
We leverage the large volumes of multidirectional trade and encourage our customers to work on fixed validity model. We are currently negotiating and discussing 2021 contracts with partner shipping lines and would request that you please contact us in regards to your own projected volumes for next year.
Our bespoke solutions uniquely reflect our customers requirements and expectations. For further information contact Ian Barnes, who would be delighted to talk to you about your situation.