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Jun 18, 2018 7:00:00 AM

Looming Freight Rate Increases… Maybe!

In the last two months there has been a wave of emergency bunker surcharges put into effect by ocean carriers as they seek to regain revenue lost to increased fuel prices.  According to Platts.com, the following carriers have (or plan) to increase prices accordingly:

  • France's CMA CGM = $55/TEU
  • Israel-based ZIM = $18-$65/TEU
  • Mediterranean Shipping Company (MSC) = Undetermined
  • Hapag-Lloyd = Announcements made of pending increases
  • Maersk = Announcements made of pending increases

According to Platts.com, these surcharges reflect a >15% increase in fuel rates since the start of 2018.

Interestingly, these surcharges will translate to freight forwarders and shippers in less than immediate ways.  First, while carriers may charge more to ship a single container, there is no guarantee that these costs will shift to shippers immediately as freight forwarders seek to maintain a solid book of business in a competitive market. Second, there is no evidence that increasing fuel rates have manifested themselves in current container pricing, so the impact to shippers is still to be determined.  Third, Platts.com June box rate projections show that “carriers are not as full as hoped,” which will make it harder to manage shipping container availability and supply chain demand pulls.  This means that there will be more of a tendency towards a “wait and see” approach to managing freight rates.  In the context of all this, the industry is still positioned better than it was in April 2018, so rate volatility should stay pretty flat in the immediate future as freight forwarders see where the dust settles on everything.

Please respond back to this post with any insights you might have.

Topics: international container shipping rates, importing and exporting, freight prices, ocean freight forecast

Author: Mario Bruendel

The Xport Guide to Next-Generation International Shipping

Innovation Begins With Inspiration!

The XPort blog brings you next-generation ideas to build a lasting source of competitive advantage for your company.  Dedicated to unraveling the many secrets of the International Shipping Industry, this blog will help readers:

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