May face a new round of freight rate increases from next month

Since April, shippers may face a new round of freight rate increases and peak season surcharges (PSS), as ocean carriers have strengthened their dominant position on the entire trade route.

It is reported that shipping companies have begun to pay attention to traditional low-income return routes in order to restore freight rates to the level that incentivizes the provision of freight containers, instead of returning empty containers to Asia as a default option.

Under the influence of regulators in September last year, Transpacific Shipping Corporation lowered its GRI (Comprehensive Rate Increase Surcharge), and is now preparing to roll out fare increases again next month.

For example, from April 1st, Hapag-Lloyd recommends a GRI of US$1200/40' from Asia to the United States and Canada. When prices are under pressure, other trans-Pacific shipping companies usually use one month’s GRI and GRI during the off-season. PSS.

At the same time, despite the slowdown in demand for Asia-Europe routes in the past few weeks, there is no sign of a sharp drop in spot freight rates. On the contrary, the market expects 450% inflation since the second half of 2020. Minor adjustments".

On both sides of the Atlantic, OOCL and Hapag-Lloyd are preparing to increase the freight rate from Northern Europe to the United States by USD 1,000 per 40' container from April 1. This traditionally stable trade route is usually adjusted within one year. The margin is less than $100.

On the return route, the shipping company will also increase a series of freight rates and PSS on April 1. For example, the PSS per container shipped by CMA CGM from Northern Europe to Asia increased by $250.

Since October last year, the spot price for the return journey from Northern Europe to Asia has almost doubled to reach US$1,600 per 40' container. This has exacerbated the plight of exporters. A UK-based freight forwarder told Loadstar this week "He has been notified that all his export trades will increase prices.

He said: "Each of our export routes are more expensive than six months ago, and some have increased significantly."

And shippers may have to adapt to the high freight rates in the coming months or even years, thereby overturning the cyclical pattern of the liner industry in the past decade. In fact, NYSHEX executives, former Wal-Mart executive Bryan Most, and Hapag-Lloyd former executive Don Davis believe that changes in freight rates on multiple trade routes may “continue”.

Many industry veterans draw on their decades of experience in the shipper/carrier industry and conclude that the structural changes in the liner industry this time are deeper and that high freight rates will be a new normal.