On January 4, the freight rate from North Asia to the United Kingdom hit a record high. The reason was that demand continued to rise and the continued shortage of equipment plagued the market. Carriers had no choice but to increase freight rates to maintain profit margins.
The Platts Class 11 container rate from North Asia to the UK reached USD 10,000/FEU, an increase of 285% from November 30. These strong rates are expected to continue until the end of the quarter.
"This is the result of a combination of surge in demand and endless congestion. It will continue until February of the Chinese New Year." said a British freight forwarder.
Market participants are eager to avoid repeating the mistakes of the 2020 Lunar New Year holiday, because the 2020 coronavirus-related lockdown has caused a very slow recovery in China’s export demand, and for most of the past year, the container market has faced a huge Challenges.
Demand during the Chinese holiday period has recovered, which has inspired people to quickly resume work to deal with the backlog of orders, but although the situation is improving, there are some opinions in the market that worry that these optimism may be short-lived.
Nonetheless, the freight forwarder said that containers booked at lower prices have not yet been loaded onto the ship.
"I just cancelled 60 containers; they are destined to go to Europe." said a freight forwarder.
By the end of 2020, the increase in freight rates in the UK is greater than that in Northern Europe, because companies seek to stock up on goods before the UK leaves the EU Customs Union without reaching an agreement.
Uncertainty in future trade relations and concerns about border delays due to customs inspections have led to increased demand for goods. Coupled with the change in consumer spending habits, shifting from services to consumer goods, seasonal demand before Christmas, and replenishment of enterprises after the closure of the country due to national blockades, it is difficult for ports to cope with the increase in quantity. This sentiment has continued into a new year full of congestion, and these situations are still the concerns of many operators.
Felixstowe is the largest container port in the UK. The first problem facing the port is the increase in traffic and subsequent delays. With the increase in demand, the storage capacity of the port has been reduced in recent months because the government has stored PPE (Personal Protective Equipment) in the port. However, according to a statement issued by the Port of Felixstowe on December 13, the volume of PPE containers "has been greatly reduced since reaching the peak."
Flight delays in Felixstowe caused some carriers to modify their schedules outside the port. Maersk and MSC now come to Liverpool through their transatlantic services TA2 and NEUATL2 respectively. Those carriers still calling at Felixstowe have been charged a congestion charge; Hapag-Lloyd currently charges $175/TEU for all cargo passing through the port from Asia.
A freight forwarder said that this may just be the beginning of the British disaster. They said: "Large carriers may no longer provide services to the UK, but only feeder vessels can provide services to British ports."
Carriers need to relocate empty containers, which also results in some containers no longer accepting export bookings for containers loaded from Europe in the foreseeable future, which puts pressure on exporters in the UK and Europe.
On January 4, PCR2—from the North Continent to North Asia—increased from US$1,250/FEU a month ago to US$2,450/FEU.
An airline source said: "These are theoretical figures, no one is taking reservations."
