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Premium rates from China no longer mandatory as space opens up

All-inclusive container shipping rates were in a wide range for shipments from North and Southeast Asia to North America as the urgency of loading time was the main determinant in how much a shipper would expect to pay.

Container premium rates on the Southeast Asia to North America route remained largely stable during the week as a slight dip in exports from China was offset by a rush to make timely bookings ahead of the Lunar New Year holidays beginning Feb. 1.

On the Southeast Asia-to-East Coast North America route, all-inclusive prices were heard in the $19,000-$20,000/FEU range, while premium rates for shipments to the West Coast of North America were at $15,000-$16,000/FEU.

Container freight plus premium service fees from China were little changed in the week to Nov. 11 at $14,000-$16,000/FEU to the East Coast of North America and $10,000-$12,000/FEU to the East Coast. But there were also pockets of space periodically available at base Freight All Kinds rates, a development that suggests that Chinese exporters were facing production issues stemming from widespread power shortages.

“China’s electrical issues might be more than publicized. President Xi Jinping told the country to stockpile food and necessities as people experience blackouts and brownouts,” a freight forwarder based in the US Midwest said. “One thing that can finally bring prices down is a lack of export volumes, and with production lead times of 30-45 days from when energy rationing to factories began, we could be seeing those effects hitting around now.”

The freight forwarder added that more bookings from China are being amended to a later date because the cargoes were not completed and ready to ship, something that only occasionally happened prior to October.

Premium rates for sailings from China could start to ease as soon as next week if export volumes show further signs of waning, but shippers from Vietnam and Singapore face a lack of service options as carriers devote a larger share of their capacity to Chinese exports, market sources said.

“We have strong demand now, but containers are not available. It looks like shipping lines want to allocate their entire capacity to China,” a freight forwarder based in Vietnam said.

Another freight forwarder based in Singapore said his clients continue to face delays as booking rollovers and cancellations are very common, despite reports of easing congestion at the Port of Singapore.

Sources in South Asia have similar complaints as container shortages and vessel unavailability have persisted for more than a year now.

Amid growth in container trade out of South Asia, S&P Global Platts launched four daily spot container headhaul and backhaul box rate assessments for the West Coast India-to-Middle East trade lane on Nov. 1. While the newly launched assessments will only reflect FAK rates, premium service fees are also commonplace for the route.

All-inclusive premium rates for West Coast India to Middle East were heard around $1,000-$1,200/TEU and $2,000-$2,200/FEU.

“It is hard to predict anything in this market. People are paying higher than the prevalent market rate to secure bookings,” a freight forwarder based in India said. “There is a container crunch and shipments are getting heavily delayed and not getting [customs] clearances on time. In the coming days, there will be a shortfall in containers again, and then naturally the rates will increase.”

Sailings from China to Brazil showed occasional availability for bookings at FAK rates, particularly if prompt loading was not required and the shipper had flexibility over a period of weeks. Rates for prompt loading subject to premium service fees for the China-to-Brazil route were in the $14,200-$14,500/FEU range, but shippers were also booking FAK rates with longer lead times in the $12,500-$13,200/FEU range, a Brazilian freight forwarder said.

Source: Platts

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