Industry Update – May 2021

Attention: Shipping Manager

Industry Overview:

Shipping lines have been experiencing significant equipment shortages this year, and the crisis is likely to last until 2022. The lack of containers globally resulted in the high prices in freight, shipping lines have been increasing their rates regularly due to the high demand. The container prices are expected to sky rocket even higher. Asia-US West Coast spot rates are up approximately 3.5 times compared to last year, which is up almost 250% year-on-year, and the rates are still rising (Source – American Shipper). The rising demand for traditional cargoes have boosted the dry bulk shipping segment enormously, the sector has seen its best start to a year in over a decade.

Another major issue in container shipping over the last few months was the immense increase in container rollover rates. Many carriers have had container rollover rates exceeded 50% during last month, and at Port Klang in Malaysia, one of the world’s largest transshipment ports, this figure reached 64% (Source – Gcaptain).

The blockage of Suez Canal earlier last month has impacted the global supply chain enormously, vessels were getting delayed and disrupted, transit time was extended remarkably, especially with shipments coming from Europe to Australia and Asia. This circumstance carries on to this month, and is causing serious empty container shortages in China, as a result, freight rates from China have increased substantially. The negative impacts of the Suez Canal blockage on the supply chain are forecasted to last for months. Due to the serious shortage of equipment, carriers have been increasing their contain detention rates, especially for 40-foot containers.

The air freight market is facing many challenges, air freight demand has been on the rise, along with the shortage of equipment, space and airport labour, which have further strained the air logistic system. Also due to COVID-19 restrictions, the number of international passenger flights have been extremely limited, which caused the air shipping capacity to tighten rapidly. Air cargo rates have gone up sharply, and have reached their peak levels five months earlier than when the peak season normally starts.

 

Situation in USA and Canada:

USA ports remain heavily congested at both East and West Coast due to increasing import volumes, and the situation has deteriorated. These ports are facing serious shortages of labour, containers, intermodal chassis and on-dock rail capacity.  These issues, coupled with the increasing demand and high volume of containers, have caused major delays to vessel schedules. Bookings get rolled regularly and there are frequent rail disruptions to any shipments coming to/from the US. The delays are approximately 5-6 weeks at congested US ports.

On the West Coast, Long Beach port has recorded its busiest April in its 104-year history. The port handled over 940,000 twenty-foot equivalent units (TEUs) in April, the volume was 37% higher than last year (Source – American Shipper). Due to the serious congestion reported last month at Port of Los Angeles and Long Beach, carriers have implemented an LCL congestion surcharge of USD 3 per w/m, applicable for all US origins and all LCL destinations effect from 31^st May 2021. Vessel wait time at US West Coast extended to 20 days due to high import volume and labour shortages.

On the East Coast, the port of Charleston has experienced its record cargo volume in April, which is up nearly 28% year-over-year.

Railway terminals are experiencing delays, rail car shortages, gate capacity restrictions and limited reservations. These operators have implemented various gate charges to reduce congestions at high-volume facilities.

The significant shortages of motor carrier power resulted in delivery delays in major cities across the country, which has increased storage fees at container terminals and rail ramps significantly. Due to the current circumstances, shipping lines have introduced a new policy regarding storage costs – effective 10^th May 2021, the carriers will no longer take responsibility for any storage costs related to the lack of motor carrier power if the motor carrier was chosen by the customers.

The situation is similar in Canada. Vessels are delayed frequently, with many booking rollovers and rail disruptions.

In addition, shipping lines will be increasing Panama Canal Surcharge to USD 207 per TEU and USD 385 per FEU for any shipments going through the Panama Canal, starting from 1^st June 2021.

 

Situation in Europe:

Ocean container prices between Asia and Europe have seen the most extreme increases after the Suez Canal incident, the rates spiked to $9,000 – $10,000 per forty-foot equivalent unit (FEU), up 480% year-on-year and continue to increase. Space availability is extremely limited, vessels are overbooked and the situation has been worsened due to the blockage of the Suez Canal. Shipments going to/coming from Europe that transship in Singapore and Port Klang are expected to be delayed at least 1-2 weeks as a result of congestions at these two hubs.

Ports in Europe have been reducing their space allocation for many carriers. We have been advised by our partners of the current situation in Europe, Marseille port in France has reduced space allocation of a shipping line from 800 TEUs down to 500 TEUs, which led to all bookings getting rolled from vessel to vessel. At the port of Giaio Tauro in Italy, thousands of containers are sitting and waiting at the port, vessel delays are happening everywhere around Europe.

Carriers have been increasing their prices with General Rate Increases and Peak Season Surcharges from various parts of Europe. LCL rates have gone up significantly, particularly from Italy, Belgium, Sweden, Netherlands, UK, Germany and Spain, the increases are between USD 5 per w/m to USD 42 per w/m.

Due to congestions at seaports in Germany, shipping lines will start charging a congestion surcharge of EUR 25 per container for all inland traffic to/from Bremerhaven, Hamburg and Wilhelmshaven.

 

Situation in Asia:

As advised in our previous industry update, equipment shortages have been an industry-wide challenge across Asia, and the situation is expected to continue throughout the next few months due to the strong cargo demand out of Asia Pacific. Particularly in Shanghai, Ningbo and Busan, these ports are majorly impacted by the Suez Canal blockage earlier last month and are experiencing a serious shortage of 40’ High-Cube containers.

In China, our partners have advised that the space situation is extremely tough with major carriers reducing space allocation and experiencing equipment shortages, the details are as below:

• Shipping line Cosco: 

• A3S service with 8000 TEU shipping capacity (Xiamen-Shekou-Hong Kong to Sydney-Melbourne-Brisbane) will have 2 vessels to be repaired in the next month
• A3C service with 8800 TEU shipping capacity (Qingdao-Shanghai-Ningbo to Sydney-Melbourne-Brisbane) will be utilised for their US line, and this route will be replaced by 5800 TEU shipping capacity vessels

For that reason, the shipping capacity of the China-Australia route will drop nearly 45%

• Shipping line Maersk: The carrier has announced that their serious equipment shortages will last until the end of 2021 

Other carriers are also facing serious shortages of equipment and space availability. As a result, ocean freight rates from China to Australia are expected to increase substantially, and the situation is forecasted to last until the end of 2021.

In South East Asia, port congestions remain critical, particularly in Singapore and Port Klang. Congestions at these two hubs are affecting the whole supply chain, vessels transhipping via Singapore or Port Klang are getting delayed, overbooked and the space situation is really tight. Congestion is not only happening in main seaports but also in smaller hubs around Asia. As a result, shipping lines have implemented congestion surcharges of USD 100/ 20’ and USD 200/ 40’ for all import and export shipments in Kuching port of Malaysia.

The COVID-19 outbreak in India continues to trigger a major crisis in the country, many cities have gone under lockdown, which is causing delays for both inland moves and sea freight moves. Space is extremely limited and vessel schedules change regularly. These delays and interruptions are expected to last until the pandemic is under control.

Furthermore, our partners have advised that many carriers have restricted their space allocation.  Their top priority is the Far East – US/ Europe bound, so the Asia-Oceania space is very limited.

 

Situation in New Zealand:

In New Zealand, Auckland port continues to be congested, due to this circumstance, a shipping line has extended the fortnightly omission of the Port of Auckland for its PANZ service (Service between Australia, New Zealand and West Coast North America). The extension will include the below vessels:

• SYNERGY OAKLAND 119S – ETD 5^th July 2021
• VOYAGE 121S – ETD 14^th July 2021
• LONDON EXPRESS 123S – ETD 4^th August 2021
• JPO LIBRA – ETD 29^th August 2021

 

General rate increase ex US East Coast, Gulf Coast and Canada to Australia/New Zealand:

A general rate increase will be implemented on exports from US East Coast, Gulf Coast and Canada to Australia/New Zealand, with effect from 1^st June 2021, as below:-

USD 300 per 20GP

USD 600 per 40GP/HC

LCL will increase by USD 12 per w/m

 

General Rate Increase from North East Asia and South East Asia to Australia/New Zealand:

We have been advised of a General Rate Increase effective 15^th May 2021, for all cargo moving from China, Hong Kong, Taiwan, Korea, Japan, Bangladesh, Cambodia, Indonesia, Malaysia, Myanmar, Philippines, Singapore, Thailand and Vietnam to Australia and New Zealand ports as follows:

USD 300 per 20GP

USD 600 per 40GP/HC

Some of the carriers have announced the above general rate increase applicable date from 1^st June 2021.

Another carrier on the same NEA to Australia route has announced a smaller general rate increase, effective 1^st June 2021, as follows:

USD 100 per 20GP

USD 200 per 40GP/HC

It will be a wait and see approach as to what they actually implement and when.

For NEA to Australia shipments, LCL will increase by USD 12 per w/m

For SEA to Australia trade, LCL will be applied accordingly.

 

General Rate Increase from Africa, LATAM, Middle East, Gulf & ISC to Australia:

Announcements were made in relation to a general rate increase for all inbound shipments from Africa, LATAM, Middle East, Gulf & ISC to Australian ports effective 15^th May 2021, the increases were:

USD 300 per 20GP

USD 600 per 40GP/HC

 

General Rate Increase from Australia to New Zealand:

A general rate increase has been announced for all exports out of Australia to New Zealand, effective from 1^st June 2021, as below:

USD 200 per 20GP

USD 400 per 40GP/HC

LCL will increase by USD 10 per w/m

 

New Zealand to Australia General Rate Increase:

Shipping lines operating from New Zealand to Australia have announced a general rate increase from the beginning of May. The increases were:

USD 100 per 20GP

USD 200 per 40GP/HC

From 1^st June, there will be another general rate increase for Westbound services from New Zealand to Australia:

USD 300 per 20GP

USD 600 per 40GP/HC

LCL will be applied accordingly.

 

Northbound General Rate Increase – Exports from Australia and New Zealand:

Announcements were made in relation to a rate increase on cargo originating from Australia and New Zealand to IPAK, Red Sea, Middle East, USA and Canada, the details are as below:

• To IPAK, Red Sea and the Middle East – USD 600 per 20GP and USD 1000 per 40GP/HC (effect from 24^th May)
• To USA (all ports) – USD 2000 per container (effect from 11^th June)
• To Canada – USD 2000 per container (effect from 7^th June)

For reefers, this surcharge is higher.

LCL shipments from Australia to/via Hamburg, Rotterdam, London and South Africa will crease by USD 16 per w/m (effect from 1^st June)

LCL to other regions will be applied accordingly.

 

Increase to Origin Terminal Handling Charges in USA – West Coast Ports

Shipping lines in the USA will adjust the Origin Terminal Handling Fee for all cargo entering/exiting West Coast ports of the United States and Canada as follows:-

Effective June 15^th 2021, the prices will be:-

USD 350 per 20GP

USD 700 per 40GP

 

Heavy Weight Surcharge into Australia and New Zealand:

Shipping lines will be applying Heavy Weight Surcharge (HEA) for all shipments coming to Oceania. The details of this new charge are as below:

• Origin: Africa, LATAM, Middle East, South East Asia, Gulf & ISC
• Destination: All Australian and New Zealand ports
• Effective 1^st June 2021
• 20’ container with a gross weight over 14.01 tons – USD 100 per container
• 20’ container with a gross weight over 18.01 tons – USD 200 per container
• 20’ container with a gross weight over 22.01 tons – USD 400 per container

 

Brisbane Empty Container Park Increase:

Brisbane Empty Container Park surcharge will increase slightly, effective 7^th June 2021. The updated empty container park fee in Brisbane will be AUD 70 per container after this date.

We will keep you posted with further updates.

Best Regards,