The closure of the Port of Yantian, a logistics hub in China, last week has worsened the situation of the already shattered global supply chain and further driven up the soaring container freight rates for shipments from Asia.
On Monday, export activities resumed, but it was still "almost impossible" to unload cargoes at the terminals. Westbound Logistics, a UK-based non-vessel carrier, told its customers: “So far, every vessel scheduled to call at Port of Yantian has been canceled, and the number of containers stranded in the port, surrounding roads, and suburbs is staggering.”
At the same time, according to the Freightos Baltic Index, the spot interest rate on the route between Asia and Northern Europe rose another 11% this week to $10,492 per 40 feet. This is a staggering 533% higher than the same week last year, and shippers on this route are still paying additional fees much higher than this to ensure the safety of equipment and obtain certain assurance of the shipment.
Westbound said: “Due to many problems with the containers, the freight rate of any port in China cannot be determined before the final sailing, but the issue at the Port of Yantian imposes further uncertainty on the overall rate, especially the FCL and LCL freight rates of Yantian."
In addition, shippers on the Asia and the United States route have been hit by another general rate increase from the carriers since June 1st. There have been reports that some Trans-Pacific shipping companies have increased their rates by more than US$2,000 per 40 feet. In addition, shippers must pay additional fees of thousands of US dollars to ensure the availability of equipment and space onboard.
This week, the FBX index of the route between Asia and the West Coast rose by 3% to $5,560 per 40 feet, and that of the route between Asia and the East Coast rose by 1.3% to $7521 per 40 feet. Compared with 12 months ago, the spot exchange rates on their routes have increased by 154% and 161%, respectively.
The limited shipping capacity and the spread of interest rate hikes have also dealt a heavy blow to shipping companies on both sides of the Atlantic. These previously stable routes appeared unaffected by the issues of other routes at first, but with carriers in desperate need of shipping capacity redeploying some transatlantic vessels to other more profitable trade routes, brought the inevitable impact of soaring freight rates, as shippers are competing wildly for the container space due to strong demand from American consumers.
The current freight rate has long been out of control. In addition, the price that shippers need to pay is much higher than the market price, and a huge additional fee must be paid to ensure the availability of space and equipment. Just now, the world’s three major shipping companies announced that they had significantly increased freight rates several times in late May and June.
Source: Mike Foreign Trade News