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CONTAINER PREMIUMS: Trans-Pacific all-inclusive rates run sideways as supply-chain woes persist

Highlights

ZIM overtakes MSC with highest premium service

Vietnam backlog grows

Asia-Europe FAK rates slide

All-inclusive rates on the trans-Pacific trade were heard largely flat during the week ending Sept. 10, even as bearish shippers braced for mid-September increases.

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Even so, premium bookings continued to dominate the market, while Freight All Kinds rates were described as "illusive," by one freight forwarder.

"Three times a week I'm on calls with customers saying 'what if we pay more, what if we pay more.' It's surprising to me that people are immune to 30 grand rates into the Midwest," the forwarder added.

During the week, S&P Global Platts heard some all-inclusive bookings to the USWC at just over $22,000/forty-foot equivalent unit, but the majority of USWC bookings remain closer to $15,000/FEU.

And with updated premium levels, ZIM has overtaken MSC as the most expensive carrier operating on the trans-Pacific, sources said.

"ZIM premium higher than MSC now, which is crazy, but we still can't guarantee space" another freight forwarder said. "[They] increased BAF too, and added on some creative surcharges."

Most market players expect further increases to come into effect as the US market continue the peak season rush.

Southeast Asia premiums flat on week, but primed to rise

The premium rates on the Southeast Asia-to-North America route remained largely stable during the week but sources indicated a possibility of increases as the shortages continued with no resolution in sight.

For Southeast Asia-to-East Coast North America, the all-inclusive premium rates largely remained stable in the $20,000-$25,000/FEU range.

However, during the week, S&P Global Platts also heard one Freight All Kinds, or FAK, rate on the trade lane at $17,500/FEU -- quoted to a freight forwarder in Thailand by Hong Kong-based carrier OOCL.

"There is simply no space," the freight forwarder said, adding that these rates for FAK values are too high, since carriers will levy hefty premiums and surcharges over and above the FAK rates to confirm bookings.

Platts Container Rate 25 — Southeast Asia-to-East Coast North America — which tracks the FAK rates in the market was assessed at $11,000/FEU on Sept. 10.

"This rate should come down next month, before it can continue increasing again as the market continues to struggle with shortage in vessel space and containers," the freight forwarder added.

For the Southeast Asia-to-West Coast North America trade lane, the all-inclusive premium rates ranged between $17,000/FEU and $20,000/FEU, unchanged from the last week.

Equipment availability is declining as supply-chain constraints and port congestion around the world prevent the smooth rotation of empty containers, sources said.

"I have a shipment for Russia, have made the booking, but we have been waiting for containers for the last 10 days ... Australia is even worse, no bookings available. The situation keeps getting worse, prices are so high still we are suffering," an exporter based in India said.

In Vietnam, lockdown restrictions and curtailed port operations have continued to hamper the port operations and movement of cargo in the country, further adding to the concerns about backlogs and pileups, sources said.

"We have still not received any official notice from the government on when the lockdown will be lifted. There are no containers available. It's a sad year, we don't know when things will come back to normal," a freight forwarder based in Vietnam said.

Asia-Europe bookings still 'largely FAK'

Container rates from Asia-to-Europe still remain largely done on FAK basis, rather than with premiums attached as the market continues to grapple lengthy delays and congestion at ports, with many containers still remaining quayside.

Despite this, freight rates remain high, with some market participants starting to appear concerned at the longevity of these firm freight levels.

This comes on the news that some market participants are retrofitting dry bulk vessels to accommodate the need for repositioning of containers to key exporting hubs around the world to try and overcome the delays in delivery times.

"Freight is just through the roof, the issues are all supply-related, actual demand is pretty much level with 2019," said a freight forwarder. "If we don't see more hauliers and chassis worldwide, how will we ever shake off these issues. Even if demand was to stop overnight, these issues aren't going away any time soon."

Platts Container Rate 1 – North Asia-to-North Continent – lost $500 on the week to $17,500/FEU on Sept. 10.