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Carriers to enjoy a two-year 'profit bonanza' from freight rate 'contagion'

FREIGHT rate 'contagion' will bring a two-year 'profit bonanza' for ocean carriers as shippers prepare for a further broadside of rate increases in June across multiple trades, as ocean carriers beef up profits ahead of the peak season

09 May 2021 - 19:00
FREIGHT rate 'contagion' will bring a two-year 'profit bonanza' for ocean carriers as shippers prepare for a further broadside of rate increases in June across multiple trades, as ocean carriers beef up profits ahead of the peak season.

After a period of stability, following hikes of up to 200 per cent in the second half of last year, transpacific carriers are rolling out a raft of new GRIs, effective June1. For example, Hapag-Lloyd is advising its Asia to North America rates will rise by US$1,200 per FEU, reports UK's The Loadstar.



The upcoming GRIs will push the index up and, in most cases, shippers outside of contracts are already paying considerably more in the form of premium surcharges to ensure space and equipment.



'I follow the indices every week, but we can't even get close to those rates,' one UK forwarder said. 'When you talk to the carriers, they just laugh when you quote those spots. The real market is at least 50 per cent higher, and that doesn't always guarantee you a box release in China.'



And a Chinese forwarding told The Loadstar the best rate he could get for a FEU from Shanghai to Felixstowe, for an end of May shipment, was $14,000 plus an equipment guarantee fee of $1,500.



'There is hardly any space, container availability at the depots is very poor and that rate will be gone by tomorrow,' said the contact.



According to Lars Jensen, CEO of Vespucci Maritime, the knock-on disruption to vessel and equipment capacity from the Suez Canal blockage at the end of March could last into the fourth quarter.



Meanwhile, maritime consultant Drewry said today it expects the 'extreme freight rates' on the transpacific and Asia-Europe trades 'will last for at least another three to five months'.



It added: 'There is also a phenomenon of contagion, where extreme freight rates spread from trade route to trade route. This happened last year, when extreme rates on the transpacific spot market were followed by extreme rates on Asia-Europe. There is strong evidence that the transatlantic trade spot market is next in line. For carriers, this means a profit bonanza, for at least another two years.'


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