Premium service surcharges have brought all-in rates above US$10,000 per FEU for prompt shipments from North Asia to the US East Coast
Spot rates from China to US East Coast were in the $11,000 to $12,000/FEU range for June shipments, the highest levels ever
There remain huge backlogs of cargo in Asia, fueling expectation that these firm rates will continue for some time
Premium service surcharges, which guarantee a cargo will make it on the voyage booked, applied by many container shipping lines on the trans-Pacific spot market have ballooned amid a shortage of empty containers and space on ships, according to S&P Global Platts.
The commodity price reporting agency said premium service surcharges have brought all-in rates above US$10,000 per forty foot equivalent unit (FEU) for prompt shipments from North Asia to the US East Coast.
Reports said vessel space and equipment are in such high demand at Asian ports that importers are willing to pay much higher than the already record spot-market rates just to get their shipments to the US in the coming weeks.
This comes as shipowners face heavy port congestion, equipment shortages and other supply chain constraints that have intensified over the last nine months.
The shortage is further exacerbated by limited air freight capacity. Some high-value items that would normally be delivered by air, such as mobile phones, now have to use containers via sea instead, analysts said.
The container crisis affects all companies that need to ship goods. But analysts say the situation has a pronounced effect on e-commerce retailers that primarily offer consumer goods, many of which are made in China.
As a result, spot rates from China to US East Coast ports such as New York/New Jersey and Savannah, Georgia, were reportedly in the $11,000 to $12,000/FEU range for June shipments, the highest levels they have ever been, said Platts.
Premium rates for other trans-Pacific trade lanes have similarly climbed to unprecedented levels. Spot rates with premiums from China to the US West Coast are in the $8,000-$9,000/FEU range, with freight-all-kinds (FAK) rates for the route assessed at $4,700/FEU on May 14.
FAK rates from Southeast Asia to East and West Coast North America were assessed on May 14 at $5,450/FEU and $4,550/FEU, respectively.
The Platts report said there remain huge backlogs of cargo in Asia, fueling expectation that these firm rates will continue for some time.
Bloomberg last month reported that the price for a container of goods from China to the US West Coast and European ports has hovered near record highs for several months, and conditions are ripe for more increases even though spot rates usually soften this time of year. Moreover, new contracts being signed by some of the biggest US importers indicate the spike won’t be a short-term blip.