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Shipowners announce new surcharges as container shortage worsens

Highlights

Hapag-Lloyd nominated doubling of rates from Asia to Europe from December

US ports struggling to clear empty containers despite import slowdown

New York — Container shipowners have nominated further surcharges and rate increases for Asia-to-Europe routes in the final weeks of the year as a shortage of boxes in Asia outpaces the slowdown in export shipments.

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France's CMA CGM announced on Nov. 10 a $600/FEU "peak season surcharge" to take effect from Nov. 15 for shipments from all Asian ports to all destinations in the Mediterranean Sea.

German shipowner Hapag-Lloyd was even more expansive in its general rate increase announcement for Dec. 1, nominating rate hikes for sailings from East Asia (excluding Japan) of $5,190/FEU to the UK, $4,710/FEU to the West Mediterranean and $4,690/FEU to North Continent.

Platts Container Rates for these routes were assessed on Nov. 10 at $2,100/FEU, $2,250/FEU and $2,050/FEU, respectively.

The sharp increase of the December GRI reflects many of the fees already being applied for shippers to prioritize their export cargoes for Asia to Europe and North America, essentially guaranteeing on-time loading and delivery amid an increasingly severe shortage of containers at Asian ports as end-of-year holiday restocking continues.

"Shippers are getting desperate and are very eager to secure space," a North Asian shipowner said. "The challenge is having equipment in the right spot and getting the empty containers back to Asia. Capacity is not the issue – we have the carrying capacity to meet demand but not the equipment."

Containers have been piling up for months at destinations in Europe and North America as ports abide social distancing protocols related to the coronavirus pandemic, limiting the number of port workers that can be deployed to clear the backlog.

US ports handled an estimated 8.1 million twenty-foot equivalent units, or TEUs, during the traditional July-October peak shipping season, a 6.1% increase over the previous record of 7.7 million TEUs set during the same season in 2018, the National Retail Federation said.

Monthly volumes eased from 2.1 million TEUs in September to around 2 million TEUs in October, and are forecast to fall further 1.7 million TEUs in November and $1.6 million TEUs in December, according to NRF estimates.

But the overall surge in imports has created a situation where the availability of containers at Asian ports has declined at a faster rate.

"As we near the end of a difficult year in terms of health, trade and politics, we have witnessed record-breaking statistics that have been virtually unpredictable," said Ben Hackett, principal at trade consulting firm Hackett Associates. "Imports hit all-time highs this summer and online shopping did the same."