Steepest Price Hikes on Europe-America Routes
Recent reports indicate that by the end of May, shipping capacity on American routes was fully booked, with European routes filling up through the first or second week of June. Container freight rates have surged again, with freight forwarding companies universally reporting severe “container shortage” issues. Due to widespread rate increases from shipping companies, market rates on multiple routes have risen sharply, especially on North American routes where transportation demand continues to recover. COSCO and ZIM reports indicate full export capacity to Europe and America, with future rates expected to continue rising.
Several major shipping companies, including CMA, COSCO, ZIM, and Evergreen, have announced comprehensive surcharges starting in May. Currently, an additional $2000 charge is expected for every 20-foot container, while Yang Ming and ONE have notified customers of an additional $1000 charge.
Supply-Demand Situation on American Routes
In the first four months of this year, the top 20 imported goods from Asia to the United States include:
• Furniture and household goods
• Plastic products
• Electrical appliances
• Automotive parts
These industries have shown significant growth, increasing by 14% compared to the same period in 2019. Although the growth rate slowed to 4% in April, it still represented a 16% increase compared to 2019. The U.S. retail industry’s inventory-sales ratio in February was lower than the same period last year, reflecting increased demand for replenishing stocks due to geopolitical uncertainties and potential risks from the U.S. elections.
Capacity Situation
Global container capacity is expected to reach 30 million TEUs by the end of June, but actual capacity has only increased by 3% due to the impact of bypassing South Africa. On 33 global trade routes, actual capacity has decreased by 4% compared to the previous year. Congestion-related capacity worldwide has reached nearly 1.86 million TEUs, accounting for 6.3% of total capacity. Additionally, on May 8th, U.S. retailers raised their forecasts for imports this year, expecting monthly imports to remain above 2 million standard containers. It is essential to closely monitor the impact of supply-demand and capacity data on freight rate fluctuations.
Maersk’s Measures to Mitigate Impact of Canadian Railway Workers’ Strike
On May 22nd, more than 9,000 Canadian railway workers are set to strike, affecting operations at Canadian National Railway and Canadian Pacific Kansas City Railway. In response, Maersk has implemented proactive measures to minimize disruptions to supply chains and ensure security.
Operational Enhancements and Adjustments
1. Enhanced Port Operations Efficiency:
Maersk is collaborating closely with Canadian National Railway (CN), Canadian Pacific Kansas City Railway (CPKC), and terminal operator DP World to optimize port operations along the Canadian west coast. Specifically, cargo from Vancouver’s Centerm Terminal is being redirected to Prince Rupert Port. This strategic move aims to alleviate congestion and maintain operational fluidity despite potential disruptions caused by the strike.
2. Adjusted TP1 Service Route:
Maersk has made adjustments to its TP1 service route to mitigate the effects of the strike on U.S. rail cargo. The temporary hub at Tacoma Port will be utilized for the upcoming four sailings. These adjustments are designed to ensure continuity and reliability in service delivery during this period of uncertainty.
Adjusted Sailings:
• Maria Y – Voyage 419N 422S
• Santa Barbara – Voyage 420N 423S
• MSC Domna X – Voyage 421N 424S
• GSL Effie – Voyage 422N 425S
The TP1 service, operated by the 2M Alliance (MSC and MSK), includes key ports in Asia such as Xiamen, Yantian, Ningbo, Shanghai, Busan, and Yokohama.
These proactive measures by Maersk underscore their commitment to maintaining reliable service and minimizing disruptions for their customers amidst challenging logistical circumstances.
New US Tariffs on Chinese Imports under Section 301
On May 14th, the United States Trade Representative (USTR) announced the results of the four-year review of the Section 301 tariffs imposed on China. The decision includes increasing tariffs on several critical imports from China, including port cranes, electric vehicles, lithium batteries, photovoltaic cells, essential minerals, semiconductors, steel and aluminum products, and personal protective equipment. The specific increases are as follows:
Battery components (non-lithium batteries): Increased to 25% in 2024
• Electric vehicles: Increased to 100% in 2024
• Face masks: Increased to 25% in 2024
• Lithium batteries for electric vehicles: Increased to 25% in 2024
• Lithium batteries for non-electric vehicles: Increased to 25% in 2026
• Medical gloves: Increased to 25% in 2026
• Natural graphite: Increased to 25% in 2026
• Other essential minerals: Increased to 25% in 2024
• Permanent magnets: Increased to 25% in 2026
• Semiconductors: Increased to 50% in 2025
• Port cranes: Increased to 25% in 2024
• Solar cells (whether or not assembled into modules): Increased to 50% in 2024
• Steel and aluminum products: Increased to 25% in 2024
• Syringes and needles: Increased to 50% in 2024
Diamond Tier Pricing on the US West Coast: $10,000 Rates Introduced
According to the latest news on May 16th, MSC (Mediterranean Shipping Company), the world’s largest container shipping company, has reintroduced its Diamond Tier pricing that was implemented during the pandemic to ensure space reliability. Under the new pricing structure, the rate for a 40-foot container on the US West Coast route is set at $8,000, while the rate for the US East Coast route is $10,000. These rates will be effective from May 15th to 31st.
Currently, the average rate for a 40-foot container on the US West Coast route is approximately $4,200, and around $5,300 on the US East Coast route. MSC’s guaranteed space rates are nearly double the current rates, prompting market watchers to see if other shipping lines will follow MSC’s lead.
Summary
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