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MSC To Increase Its Peak Season Surcharge Between Europe And US

MSC is to increase its peak season surcharge (PSS) between Europe and the US by $1,000 per 40ft on 1 October.

The Geneva-headquartered carrier said its PSS on the route would be $2,700, due to the strong demand for containers and difficulties in finding supplies of them.

Spot rates on the tradelane have leapt by about 180% in the past six months, with today’s Freightos Baltic Index (FBX) component indicating a rate of $5,888 per 40ft.

One UK-based forwarder with substantial cargo flows to the US told The Loadstar recently the market had “just gone crazy overnight”.

He added: “One minute we were thinking how lucky we were not to be suffering the massive rate hikes on cargo from Asia, and then we started to get advisories from carriers of GRIs and surcharges and virtually told that, unless we paid a premium fee on top of the other increases, our containers would not be shipped.

“It’s difficult to prove, but it must be more than a coincidence that this all started to kick off as some of the carriers were ‘adjusting’ their capacity.

“We have been used to stability on the North Atlantic for years, and rates have never been subject to the extreme volatility we have seen on the Asia to Europe route, but that has all changed and I don’t see the rates coming back down.

“It means some lower-margin exports to the US will no longer be viable, and I have already had that conversation with a couple of our long-standing customers. It’s another nail in the coffin for UK exporters,” he said.

And secondary trades are also seeing huge increases in freight rates. According to a new price assessment by S&P Global Platts, spot rates from Asia to South America are soaring.

For example, its new North Asia to east coast South America component was assessed this week at $11,200 per 40ft, which is nearly 560% higher than the $1,700 seen in May 2020.

Meanwhile, on the red hot Asia to US west coast lane, Freightos described prices as “stable”, with the FBX01 steady at $18,425 per 40ft – still 452% higher than a year ago. Likewise on Asia to the east coast, the FBX03 component was virtually unchanged, at $20,057 per 40ft.

However, the flat rates may be because the carriers have nothing left to sell, as all their sailings are fully booked for weeks to come, and any spare capacity caught up in the line of 40-plus ships waiting to discharge cargo in the San Pedro Bay.

And big shippers, desperate to get their product into the US in order not to miss the start of the peak demand holiday season, are increasingly turning to private ship charters. Walmart, Home Depot, Best Buy and Dollar Tree are among major US retailers that have reportedly decided on a DIY solution for the supply chain crisis.

“The high rate/no service campaign being waged by carriers today has forced large and medium-sized retailers to look for alternative ways to move their containers,” said Jon Monroe, of Washington state-based Jon Monroe Consulting.

Source: TheLoadstar.com

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