Trans-Pac rates skyrocket to record highs with premium surcharges
US importers are paying as much as 50 per cent higher than the already record spot-market rates just to get their shipments to the US in the next few weeks due to the high demand of vessel space and equipment at Asian ports
US importers are paying as much as 50 per cent higher than the already record spot-market rates just to get their shipments to the US in the next few weeks due to the high demand of vessel space and equipment at Asian ports.
Spot rates in Asia-North America trade are about US$4,000 per FEU to the West Coast and $5,000 per FEU to the East Coast, although carriers and freight forwarders say importers are paying as much as $6,000 per FEU to the West Coast and $8,000 per FEU to the East Coast when the cost of premium equipment and space guarantees are added to the base freight rate.
These extraordinary developments, which have been unfolding since last month during what should be a slack period in the eastbound trans-Pacific, illustrate the pressures retailers face to lock in equipment and vessel space as imports from Asia appear to be accelerating, rather than slowing down, during what should be a slack period.
Patrick Fay, president of the non-vessel-operating common carrier (NVO)/logistics provider BOC International, told IHS Media that it is increasingly difficult to book shipments on vessels that will leave Asia before many factories there close for a week or two for the annual Lunar New Year holiday that falls on February 12.
'There is no trans-Pacific space available prior to Chinese New Year other than what is currently booked/forecasted. Every extra booking is being squeaked out as spot or premium on shortfalls/cancelations,' Mr Fay said.
Most, if not all, carriers are charging space premium guarantees (SPGs) that total thousands of dollars to secure equipment and space on vessels leaving Asian load ports in the coming few weeks, said Jon Monroe, who serves as a consultant to NVOs.
Premium surcharges vary from carrier to carrier. For example, a rate sheet provided by another NVO that covers 10 trans-Pacific lines lists premium rates that 'protect space' ranging from $1,000 to $3,000 per FEU on top of the base freight rate. Seven of those carriers listed premium service surcharges of $2,000 or higher.
An NVO who requested anonymity added that the spot rates listed on the Shanghai Containerised Freight Index and other indices of about $4,018 per FEU to the West Coast and $4,729 per FEU to the East Coast will not get most containers onto ships today at Asian ports. Furthermore, the premiums, which are supposed to guarantee space and equipment, may do no such thing, he said.
'Those guarantees have fallen away. All it does is get you to the front of the line,' the NVO said.