Container Rates Still Rising

Container Rates Still Rising

by | May 23, 2024 | Economic trends, Importing, Transportation

 

Recent developments are causing an increase in shipping costs, with container rates still rising since the start of 2024. Carrier companies could soon raise prices to $20,000 for 40ft equivalent units (FEU) by the end of the year. In particular, a surge in Freight All Kind (FAK) rates is not bound to a specific commodity. The Drewry World Container notes an increase of 11% for a 40ft container, bringing the average cost to $3,511. This is a 104% increase compared to the same period last year. The spot rates of specific trade routes’ have also risen by nearly 30% in the past two weeks. With peak season starting in mid-August, the current situation may lead to higher costs and delays in the coming months.

Why Are Container Rates Still Rising?

Different global factors have contributed to the rise in container rates, including the scarcity of available space. Along with the Panama Canal drought and the US-China trade war, the Red Sea crisis significantly adds to the surge. The war near the waterway has caused ships to reroute around the Cape of Good Hope in South Africa. This added nearly 14 days to some shipments, extending transit times and limiting container capacity, raising container costs. Meanwhile, demand for international shipping has reached record levels in Q1 of 2024, nearly up 9.2% compared to Q1 last year. The present market is due to lowering capacity and transit times during the coronavirus pandemic.

Although the international shipping industry has recovered from COVID-19, the impact is still in the minds of shippers. The current scarcity of container space is following the pandemic trend, and many are preparing in advance. Companies are importing more goods now to have inventory and prevent potential delays as the peak season nears. The rise in container rates directly results from the demand and is a GRI (General Rate Increase). GRIs are standardized adjustments by carriers to base rates across shipping routes. With prices rising as the peak season approaches, some may be willing to pay more to secure space.

What Does It Mean For The Shipper?

The hike in rates has a direct impact on shippers that extends beyond having to pay extra costs. Other effects include increasing cancellation of reserved space, new weight limits, and more significant surcharges. While it may be impossible to avoid rising rates, exporters must prepare beforehand to prevent any adverse issues from arising. Shippers have already started looking for alternative methods of conveyance, like air, to prevent delays. They must be current with any news in the international shipping industry. This can include constantly checking news websites or other media sources for information. Understanding your supply chain is also crucial in making informed decisions.

Despite the current rising costs, shippers still must move cargo internationally. However, they must take the proper steps to ensure the transport of their goods. Another way to prepare is by using the assistance of a freight forwarder to move your cargo. Forwarders act as the middleman between the shipper and the carrier transporting the goods.  They have various responsibilities, including finding the best rates for exporters. Along with guiding shippers throughout the process, they assist with the duty payments and documentation on their behalf. Call A1 Worldwide Logistics at 305-425-9456 to communicate with our freight forwarders regarding your shipment.

Importing During Chinese New Year

Importing During Chinese New Year

by | Jan 25, 2024 | Importing, Shipping Logistics, Supply Chain

 

Due to China’s significance for international trade, shippers may face challenges when importing during Chinese New Year. Making up roughly 14% of the world’s total exports, China is the largest exporter of goods globally. The Chinese New Year is a festival that celebrates the start of a new year in a lunisolar Chinese calendar. This year, the Chinese New Year will start on February 10th, 2024, and finish on February 24th, 2024. During the holiday, ports, shipping companies, and factories limit operations or shut down, which can cause supply chain disruptions. This article will explain how the Chinese New Year affects shipping and how to prevent delays when moving cargo.

What Should You Know When Importing During Chinese New Year?

Chinese New Year is a 15-day period where business and production in the country decrease. With China being a powerhouse in world trade, a slowdown has a significant impact internationally. A major impact is that supply chain disruptions can grow during this period. Along with factories closing for more than weeks, a considerable part of China’s population is on vacation. Companies that import goods from China may experience delays and unavailability. Meanwhile, there is an increase in demand in the weeks leading up to the holiday, which can mean port congestion. This is at a time when the ports are already operating at limited capacity.

Congestion is not only felt at the ports; trucking services for moving the cargo to its final location also feel the bottleneck. The increase in demand can mean higher shipping costs since there is limited capacity to match it. Along with increased freight rates, carriers may add charges like peak season surcharge. There is also a shortage of containers due to the demand during the holiday. Even after Chinese New Year finishes, businesses and manufacturers do not return to normal immediately. It can take over four weeks for companies to return to normal production levels. Shippers can feel the majority of the impact between mid to late February.

How Can You Protect Your Supply Chain

Because of the impact of the holiday, shippers that have to move their cargo internationally must be ready to prepare. Preparing for the Chinese New Year should be done weeks in advance. Planning ahead can mean booking container space beforehand or communicating your needs with your logistics provider. Using more than one supplier or supplier in different countries can also help. In a scenario where prices increase, using LCL (less than Container Load) is beneficial for your shipment. LCLs keep prices down and can help prevent delays since full container loads are necessary before the cargo can move. Using different methods of conveyance, like air or land, can also assist in avoiding delays.

As the Chinese New Year quickly approaches, it is essential that international shipping is not disrupted by delays or other issues. Another way to protect your supply chain is by talking to a logistics company. Using the help of a dedicated and experienced logistics provider can help you navigate the Chinese New Year. Reach A1 Worldwide Logistics at 305-440-5156 for a quote to move your cargo Internationally. We also provide customs brokerage services to clear your cargo when it reaches the U.S.