The freight rate has hit an unprecedented high. The shipping company has raised the GRI of the U.S.
- Author:Chelsea
- Source:Sailing
- Release Date:2021-01-09
According to the Freightos Baltic Freight Index (FBX), in the past week, freight prices from Asia to Northern Europe and the Mediterranean have soared by 25%, and are now three times higher than at the end of October.
At the same time, in the past week, trans-Pacific freight to the west coast of the United States has dropped by 7%, and freight to east coast ports has dropped by 8%, but the freight rate is still more than twice the level of a year ago.
Regulators in China and the United States have been trying to control the increase in freight rates in recent weeks, but the trans-Pacific return freight rate rose to US$703/FEU on the West Coast of the United States and US$769/FEU on the East Coast of the United States.
At the same time, in the past week, trans-Pacific freight to the west coast of the United States has dropped by 7%, and freight to east coast ports has dropped by 8%, but the freight rate is still more than twice the level of a year ago.
Regulators in China and the United States have been trying to control the increase in freight rates in recent weeks, but the trans-Pacific return freight rate rose to US$703/FEU on the West Coast of the United States and US$769/FEU on the East Coast of the United States.
Since the end of October 2020, freight rates for trade from Asia to Europe have tripled
"The freight rates to Northern Europe and the Mediterranean reached an incredible US$7,000/FEU before the surcharge. They have tripled since the end of October and tripled year-on-year. With the soaring freight rates and services With the decline in quality, European freight companies and shippers are urging regulators to step in." said Ethan Buchman, Freightos' chief marketing officer.
Nevertheless, shipping companies have recently raised the GRI (General Rate Increase) across the Pacific region.
Recently, the eight major trans-Pacific eastbound container shipping companies updated their respective tariffs reported in FMC. Starting from February 1, 2021, GRI has increased by about US$1,000. Shipping companies include CMA CGM, COSCO, Evergreen, and Hapag Lloyd. , HMM, Ocean Network Express (ONE), Yang Ming, ZIM, etc.
Among them, Evergreen Shipping announced that it will increase the GRI for trans-Pacific routes and the Far East, South Asia, Middle East, South Africa and East Africa routes. Starting from February 15, the GRI for dry containers will be US$900/TEU, and the GRI for dry containers and refrigerated containers. It will be 1,000/FEU and the GRI for a 45-foot dry container will be $1,266.
The following table is the charging standard for 40-foot container, and the charging standard for other box types is calculated according to the general conversion formula. The GRI effective on February 1, 2021 is the third GRI tariff adjustment for East Asia/U.S. routes since 2020.
"The freight rates to Northern Europe and the Mediterranean reached an incredible US$7,000/FEU before the surcharge. They have tripled since the end of October and tripled year-on-year. With the soaring freight rates and services With the decline in quality, European freight companies and shippers are urging regulators to step in." said Ethan Buchman, Freightos' chief marketing officer.
Nevertheless, shipping companies have recently raised the GRI (General Rate Increase) across the Pacific region.
Recently, the eight major trans-Pacific eastbound container shipping companies updated their respective tariffs reported in FMC. Starting from February 1, 2021, GRI has increased by about US$1,000. Shipping companies include CMA CGM, COSCO, Evergreen, and Hapag Lloyd. , HMM, Ocean Network Express (ONE), Yang Ming, ZIM, etc.
Among them, Evergreen Shipping announced that it will increase the GRI for trans-Pacific routes and the Far East, South Asia, Middle East, South Africa and East Africa routes. Starting from February 15, the GRI for dry containers will be US$900/TEU, and the GRI for dry containers and refrigerated containers. It will be 1,000/FEU and the GRI for a 45-foot dry container will be $1,266.
The following table is the charging standard for 40-foot container, and the charging standard for other box types is calculated according to the general conversion formula. The GRI effective on February 1, 2021 is the third GRI tariff adjustment for East Asia/U.S. routes since 2020.
Note 1: COSCO SHIPPING’s GRI tariff adjustment is only applicable to freight under all service contracts.
Note 2: Hapag-Lloyd’s GRI freight rate adjustment that took effect on February 1, 2021 was actually previously effective on December 1, 2020. It took effect on October 1, 2020 at the earliest, and was later postponed to November 2020. It took effect on the 1st, and was later postponed to take effect on December 1, 2020, and then postponed to take effect on January 1, 2021, until February 1, 2021.
The missing box lasts at least another 3 months
According to the China Shipping Business Climate Survey, the prosperity index value of container shipping companies in the first quarter of 2021 is expected to be 138.59 points, down 14.47 points from the fourth quarter of 2020, and falling to a relatively prosperous range; the confidence index of container shipping companies is expected to be 166.44 points , A decrease of 6.25 points compared with the quarter of 2020, and the confidence index remained in a strong business range. Entrepreneurs continue to be optimistic about the container transportation industry.
In 2020, under the influence of changes in the international economic situation and the spread of the global epidemic, the shipping market will be ups and downs, but the lack of containers on international routes has set off a new round of prosperity in the global shipping market. According to the survey of China's shipping industry, 73.44% of the port and shipping companies believe that the shipping market in 2021 may continue to be good this year, and the market freight rates are steadily improving. Among them, 4.42% of the companies believe that freight rates will rise by more than 20%; 38.05 % Of enterprises believe that it will increase slightly by 5% to 20%; 30.97% of enterprises believe that market freight rates are basically the same as this year. Only 26.56% of enterprises believe that the market freight rate will decline.
At the same time, since August 2020, due to factors such as the decline in global logistics efficiency caused by the epidemic, the shortage of containers has become prominent, and the market is even more "hard to find". According to a survey of China's shipping industry, over 90% of container companies said that the lack of containers will continue for 3 months or more. Therefore, the shortage of containers still exists in the short term, and the freight rate in the container transportation market will continue to be affected by the shortage of empty containers. Container companies need to take effective measures to deal with the shortage of containers.
Demand continues to remain strong during the Spring Festival
Although the Asian Lunar New Year holiday will begin on February 12, shipping consulting company Sea-Intelligence said that due to the spread of the epidemic, it is expected that shipping companies will find it difficult to plan capacity management for this year's Spring Festival holiday.
Sea-Intelligence CEO Alan Murphy said: In a ‘normal’ year, as the factory is closed during the Spring Festival, the carrier will announce several suspensions during the Spring Festival to balance supply and lower container shipping demand. However, 2020 is far from normal, and there seems to be no consensus on the production impact of the Lunar New Year in 2021. "
Note 2: Hapag-Lloyd’s GRI freight rate adjustment that took effect on February 1, 2021 was actually previously effective on December 1, 2020. It took effect on October 1, 2020 at the earliest, and was later postponed to November 2020. It took effect on the 1st, and was later postponed to take effect on December 1, 2020, and then postponed to take effect on January 1, 2021, until February 1, 2021.
The missing box lasts at least another 3 months
According to the China Shipping Business Climate Survey, the prosperity index value of container shipping companies in the first quarter of 2021 is expected to be 138.59 points, down 14.47 points from the fourth quarter of 2020, and falling to a relatively prosperous range; the confidence index of container shipping companies is expected to be 166.44 points , A decrease of 6.25 points compared with the quarter of 2020, and the confidence index remained in a strong business range. Entrepreneurs continue to be optimistic about the container transportation industry.
In 2020, under the influence of changes in the international economic situation and the spread of the global epidemic, the shipping market will be ups and downs, but the lack of containers on international routes has set off a new round of prosperity in the global shipping market. According to the survey of China's shipping industry, 73.44% of the port and shipping companies believe that the shipping market in 2021 may continue to be good this year, and the market freight rates are steadily improving. Among them, 4.42% of the companies believe that freight rates will rise by more than 20%; 38.05 % Of enterprises believe that it will increase slightly by 5% to 20%; 30.97% of enterprises believe that market freight rates are basically the same as this year. Only 26.56% of enterprises believe that the market freight rate will decline.
At the same time, since August 2020, due to factors such as the decline in global logistics efficiency caused by the epidemic, the shortage of containers has become prominent, and the market is even more "hard to find". According to a survey of China's shipping industry, over 90% of container companies said that the lack of containers will continue for 3 months or more. Therefore, the shortage of containers still exists in the short term, and the freight rate in the container transportation market will continue to be affected by the shortage of empty containers. Container companies need to take effective measures to deal with the shortage of containers.
Demand continues to remain strong during the Spring Festival
Although the Asian Lunar New Year holiday will begin on February 12, shipping consulting company Sea-Intelligence said that due to the spread of the epidemic, it is expected that shipping companies will find it difficult to plan capacity management for this year's Spring Festival holiday.
Sea-Intelligence CEO Alan Murphy said: In a ‘normal’ year, as the factory is closed during the Spring Festival, the carrier will announce several suspensions during the Spring Festival to balance supply and lower container shipping demand. However, 2020 is far from normal, and there seems to be no consensus on the production impact of the Lunar New Year in 2021. "
Murphy pointed out that the current suspension is lower than in previous years, especially in the trade from Asia to Europe, although this has no substantial impact on the level of freight rates.
Jon Monroe of Worldwide Logistics, a US global logistics company, believes that slowing demand is a good thing for all parties involved, allowing shipping companies to clear the backlog of orders.
"The demand for cargo owners (BCO) continues to remain strong during the Spring Festival. There are rumors that orders have decreased, but as of now, the order backlog has been long. If the market slows down, it first needs to slow down enough for carriers to clear waiting for loading in Asia Backlog of containers."
As shipping companies and shippers enter this year's contract negotiations, these backlogs will maintain the level of spot freight rates in the coming months. One shipper said that from the shipper’s perspective, the shipper’s reports of early contract negotiations indicated that they were “not going well”. However, for most negotiations, it is "premature to draw any conclusions" and these contract negotiations are still ongoing.
Jon Monroe of Worldwide Logistics, a US global logistics company, believes that slowing demand is a good thing for all parties involved, allowing shipping companies to clear the backlog of orders.
"The demand for cargo owners (BCO) continues to remain strong during the Spring Festival. There are rumors that orders have decreased, but as of now, the order backlog has been long. If the market slows down, it first needs to slow down enough for carriers to clear waiting for loading in Asia Backlog of containers."
As shipping companies and shippers enter this year's contract negotiations, these backlogs will maintain the level of spot freight rates in the coming months. One shipper said that from the shipper’s perspective, the shipper’s reports of early contract negotiations indicated that they were “not going well”. However, for most negotiations, it is "premature to draw any conclusions" and these contract negotiations are still ongoing.