ENQUIRE TODAY Back to Services
Australia asks NZ to join forces to tackle trade dispute with China
May 31, 2021
Worsening congestion at China’s Yantian port
June 7, 2021

Container premium surcharge on Trans-Atlantic trade

With the peak season surcharges and rate are increasing from June after rates reaches 80 percent since the end of March. According to forwarders while the spot rates are increasing, the baseline rate is lower than on other east-west trades but there are some who carries trans-Atlantic and starts to charge premiums to guarantee space. Prevailing market to guarantee loading would cost up to $2,500 on the trans-Pacific and Asia-Europe trade.

“Two carriers we use on the North Europe-North America trade lane are adding premiums for guaranteed space, but depending on the volume being shipped, and on the particular ship being used, it is still possible to gain access to capacity on the trade without paying the premiums,” a forwarder told JOC.com.

Just on Thursday the spot rate reaches $3,325 per TEU that almost double the $1,838 per TEU that was recorded on March 31, which is according to the data from rate benchmarking platform Xeneta. A rate of 100 percent in trans-Atlantic just within this week which is higher than during the same period in pre-pandemic 2019, the rates were stable and traded within a band of $300 per TEU not until it spikes on April 1 this year.

Alison Leavitt, managing director of the Boston-based Wine and Spirits Shippers Association, whose members ship 350,000 TEU per year on the Europe-North America trade, said the average June rates offered to the market from Rotterdam to New York ranged from $4,000 to $8,000 per FEU

“The range in rates is incredible depending on carrier, equipment, or service contract situation,” she told JOC.com. “While congestion is still very high and we are seeing additional surcharges in June, it is not as significant as the April uptick.”

During the peak season surcharges on June 1 a rate of %500 and $2,000 per TEU will be levied on North Europe-North America, and between $500 and $2,100 per TEU on Mediterranean-North American routes. Some carriers are also planning to implement rate increases of $300 per TEU from early June.

It is to be expected that the rate levels which has an equipment shortage would be worsen in the coming weeks, ContainerXChange warned in the coming week. An average prices for used 20-foot containers across Europe rose from 57 percent to $2,119 between January and April, which is according to the latest container trading data from ContainerXChange.

“The confluence of theoretical high availability and soaring prices for boxes strongly indicates that container lines are prioritizing empty containers over export cargo from Europe,” said ContainerXChange CEO Johannes Schlingmeier.

“The trans-Atlantic trade is booming, with double-digit [percentage] growth figures, but it is facing reliability issues and delays, and the equipment shortages have been made worse by the Suez disruption at European ports,” said Michael Amri, global head of sea freight and FCL for Hellmann Worldwide Logistics.

Amri said the trans-Atlantic has historically been “quite stable” compared with the more volatile Asia-Europe and trans-Pacific trades, “but this year the rates are skyrocketing, carriers are rolling cargo, equipment is short, and it is not easy to find space at the moment.”

No end in sight to the US demand

Leavitt said she was not seeing any end in sight to the current US import demand. “Warehouses across Europe are full, vessels continue to be overbooked in every region, and inventory is running low on many products,” she said. “The congestion is creating a challenging situation.”

Judah Levine, research lead at rate marketplace Freightos, said the rates were demand-driven, but helped along by demand outstripping available capacity. “As the vaccination campaign in the US is making progress, we anticipate that trans-Atlantic demand will continue to be strong,” he told JOC.com.

After years of fluctuating fortunes the carriers are capitalizing the huge consumer demand and increases online retail shopping with new strategic moves which is said by Xeneta CEO Patrik Berglund.

“A lack of equipment and the ongoing ramifications of COVID-19, added to unforeseen factors such as the blocking of the Suez Canal, have squeezed supply chains, pushing capacity to bursting point,” he said in a statement Thursday.

“With carriers blanking sailings to manage capacity, added to continuing high demand and reduced retail inventories, it’s difficult to see the prospect of any immediate rates relief on the horizon.”

Article inspired from the JOC.com.
For more information please do contact us.