Carriers test new IMO charges in the spot market, which are implemented and accepted on some routes. Huge disparity in charge levels.
Most carriers have implemented so-called “IMO 2020 transition charges” from 1 December, leading to higher spot rates, although some forwarders are starting to pay them only from 1 January.
Independent, verified market spot rate data from the World Container Index assessed by Drewry confirms that rates on from Shanghai to Los Angeles increased by 14% in the first week of December and this was followed by an increase of 17% in rates from Shanghai to Rotterdam in the second week.
It is too early to say whether these increases are sticking. Previous general rate increases did not stick.
The IMO charges enable carriers to increase their previously low rates. Despite blank sailings, rates on the Asia-Europe trade have been low owing to weak demand. According to the Drewry Forwarder Benchmarking Club, spot rates in 3Q19 were approximately $150 lower per 40ft container than in the same period in 2018. Carriers are using IMO surcharges to lift spot rates, especially as annual contract negotiations are approaching. Few shipping lines like Hapag-Lloyd and CMA CGM have announced these charges – explicitly at $135 and $120 per teu, respectively – whereas market leader Maersk chose to include it in its FAK rates.
While tracking spot rates in December, we have witnessed a wide variation in IMO surcharges depending on different carriers, different forwarders and different trade lanes.
The picture may be somewhat ‘fuzzy’ now, but is expected to become clearer in the next few months.