ocean freight industry Archives

Causes of container shipping industry challenges as experienced by Feroniki

Posted on 8 July, 2022 | by admin

Although the container shipping industry is gradually coming back to normal after two years of destabilization caused by the pandemic, the freight forwarding companies are still struggling with numerous hurdles. The port congestion, the sky-high fuel prices, the lockdowns in China and the war in Ukraine are just some of the factors that are still hindering normal operations. Nevertheless, on the brighter side, even though the sea freight shipping rates are still above the pre-pandemic times, there has been a substantial drop in the spot rates in 2022.

The challenges in the container shipping industry

As stated by Mrs. Rania Skouta, the operation Manager of Feroniki SA, Globalia member in Piraeus Greece, “I have to admit that in the past months we have faced many problems such as delays because of the situation in ports of Singapore, Gioia Tauro and Tekirdag where we ship cargoes frequently. Nevertheless, we have managed to overcome the crisis and continue serving our clients in the best possible way.”

Some of the ongoing problems in container shipping could result in a new supply chain crisis and rate fluctuations. For example, there is a high probability of backlogs of cargo piling up in the ports in China. In a situation like this, freight forwarders need to take extra precautions and keep all options open.

“The fall in the sea freight rates is welcome news for us. Nevertheless, there are still many challenges lying ahead of us. My teammates are working round the clock to keep tabs on the vessel’s availability and check if they meet the requirements of our clients. Additionally, we are checking the surcharges for each month and the percentages and BAF/CAF, etc, or if there is any PSS. Next, we are making sure that the vessel in question is available on the confirmed dates. Once all the work is done, we just secure the required equipment in time for the loading to meet the cut-off of the subject vessel with the confirmed rates. The rest is monitored by our team 24×7,” adds Mrs. Skouta.

Feroniki SA- independent freight forwarder — Container shipping industry challenges as explained by Feroniki SA

She further points out, “Although the reduction of the rates is a great benefit for the shippers, we are still having to face problems relating to port congestion and equipment availability. The war in Ukraine and the lockdowns in China are further adding to the problems. For instance, many shipping lines have suspended services to/from Greece for several reasons. Moreover, finding equipment in the Far East is becoming a tricky affair primarily because of the local lockdowns.”

The drop in sea freight shipping rates

“Right now it is a good time for the ocean freight industry as rates are slightly decreasing. This will allow us to obtain more shipments and offer very competitive rates.” The steady decrease in sea freight shipping rates that started at the beginning of 2022 is still ongoing. The prices fell further in the lean season following the Chinese New Year. In the last two years, several factors hiked up the shipping cost. These factors included container and equipment shortage, port congestion, and insufficient workforce.

The average international spot rate decreased by almost 4 % at the start of April 2022. Shipping rates on the transpacific routes went down for the fifth week in a row. Freight rates to the US declined by around 6%-8%. Additionally, since April the overall sea freight rates have decreased by a whopping 12%.

Many industry experts are wondering if the decreasing rates is because of lower demand. Some are suggesting that it could indicate the revitalizing efforts of the industry and that there could be a sharp increase in capacity from the 3rd or 4th quarter of 2023.

Reasons behind the decreasing freight rates

The China factor

The decreasing volume of shipments following the peak during the Chinese New Year could be another important reason behind the price drop. Moreover, the lockdowns in Shanghai and other manufacturing centres in China are also a contributing factor. The normal functioning of the air freight industry could be another reason behind the declining prices.

The impact of the normal functioning of the air freight industry

During the pandemic a large number of passenger planes were grounded. As a result, forwarders couldn’t use the belly hold of the passenger flights for transporting shipments. This led to further pressure on the sea freight sector. The normal functioning of the air freight sector has freed up space for the ocean freight industry.

Changes in consumer demands

The two years of the pandemic witnessed a massive increase in consumer demands and e-commerce shopping trends. The spending pattern of the consumers has finally returned to the pre-pandemic level. The inflation and the rise in fuel prices around the world surely prompted consumers to cut down on spending. This obviously had significant consequences on space availability in the container shipping industry. More space availability definitely has helped to lower the freight rates.

“At the moment we are trying to make the best of the situation by further boosting our relationship with our partners, suppliers and customers. Years of steady cooperation is an important factor that has allowed us to continue providing our clients with dependable door-to-door transportation services. The flexibility and persistence of our team along with our longstanding connections, are some of the reasons why we are always able to support our customers with a range of solutions even in these uncertain times,” concludes Mrs. Skouta.

Globalia wishes Feroniki the very best for their upcoming projects!

Container prices fall since September: A thorough look at the container availability index in ports

Posted on 17 December, 2021 | by admin

As the year draws to an end, it is time to look at the global container shipping trends to get an overview of the market situation in the last year and prepare for the coming season. Our news for today is a special report about the international container shipping trends as suggested by Globalia’s media partner Container xChange– the largest marketplace for container leasing and trading.

container availability index — 40 HC Average Container Prices

A look at the container prices

A look at the important ports in the US, UK, China, and Germany shows a downward trend in container prices between August to November. Container prices in the USA have reduced by almost 15% in the last 3 months. To quote Johannes Schlingmeier, the Container xChange Co-founder, “Over the last two quarters, the industry has faced skyrocketing container prices. However, these increases first leveled off and have now started gradually decreasing. It seems, what we’re seeing now, is a turning point.”

container availability index-container xChange — Average one-way leasing pickup charges

The largest drop in container prices can be noted in the Port of Qingdao from September to November. In this port, the average cost of 40 HC containers went down by over 23% amounting to around $1756. On the other hand, in the Port of Ningbo, a 40 HC container cost $959 less in November compared to September.

Explaining Container Availability Index

The CAx (Container Availability Index) is an index (a tool) that allows interested parties to monitor the availability of containers in certain ports through the import and export moves of full containers. A CAx value of 0.5 means that the same number of containers leave and enter a port in the same week. CAx values of > 0.5 means that more containers enter and CAx values of < 0.5 means more containers leave a specific port. The CAx is calculated based on the tracking data of millions of containers. The data is collected from shipping lines, depots, and terminals.

The Leasing and Trading Rates of Containers

trading and leasing rates of shipping containers

Inbound containers are piling up in ports across the world

The Container xChange research took into account 83 major ports spanning the globe. However, out of these 83 ports, only 9 ports have CAx values lower than 0.50. The CAx values were more than 0.50 in 74 ports. In 2020, 61 ports had CAx values lower than 0.50 while in 2019 just 34 ports had CAx values less than 0.50. This demonstrates how the pandemic disrupted the normal functioning of ports. Generally, the Christmas season sees a surge in containers in North America and Britain while the ports in Asia register a drop in container volume. However, presently, just a few Chinese ports have a lower CAx value while the rest of the ports have greater CAx values. This suggests that containers around the globe are either delayed or stranded.

A look at the regional trends in container shipping

A drop in leasing rates in China

The average one-way pickup rates Ex China to Germany and the UK have reduced between September to November. This rate will further drop in the coming months. The average one-way pickup rate from China to the US has gone down by 25% between August to September. However, this rate has increased in October and November.

A fall in container prices since September

There has been a fall in the prices of 40 HC containers across 14 Chinese ports. Moreover, this same trend can be noted for 20 DC containers as well. Average container prices went to an all-time high in September. Since then the price has been falling till the last week of November. In Shanghai, the cost of 40 ft HC containers went down by 21% from $6,686 in September to $5,746 in the first week of December. In Yantian Port, this drop was around 12%, in Tianjin Port 16%, in Shenzhen around 7%, in Dalian 11%, and in Qingdao 23%.

China Container inbounds ratio highest since 2019

In November 2020, Shanghai Port saw the biggest decline in CAx values that reached a rock bottom 0.05. In 2021, on the other hand, the CAx values went down to 0.50. This implies that the number of containers arriving and departing from the ports is the same. In Yantian Port, the average CAx value of 0.27 demonstrates that the number of outbound containers is greater than before but still not at the pre-pandemic level.

CAx values are higher in Shanghai and Tianjin than in Ningbo and Qingdao

The CAx value at Ningbo has increased substantially than in previous years. It is now gradually going back to the pre-pandemic levels. In 2020 the Port of Qingdao saw a massive drop in the CAx values. In 2021, the drop in value is considerably less. This implies that in November 2020, the number of inbound containers was lesser than that of outbound containers. In 2021, the outbound containers were not greater than that of the inbound containers.

CAx values at Tianjin and Dalian Ports

The CAx values at Tianjin were greater than that of Ningbo and Qingdao ports in November 2021. At the 48th week of this year, the CAx values were around 0.71 while last year it was 0.16. Before the pandemic started, this value was 0.39. Therefore, it shows that there are more inbound containers at these ports. In the Dalian Port, the average CAx value was 0.49 in November that is 4 times greater compared to 2020.

Container shipping trends in India

In Chennai, the cost of 40 ft HC containers has reduced from $5550 in August to $5323 on the 1st of December. In Nhava Sheva Port the price for the same has dropped from $5044 in October to $4875 in the first week of December. The price for the same before the pandemic was around $1000 for 20DC and $2000 for 40DC. The Chennai Port witnessed a 17% jump in average prices of 20 DC containers. In the Nhava Sheva Port, the average container price rose from $2292 in October to $2320 in November

The container availability is not likely to increase in 2022

In the Nhava Sheva Port, the CAx values were more or less stable at 0.78 in October end. In the last two years, this value was lower demonstrating a downward trend till the year ending. This implies that a greater number of outbound containers were recorded at the Nhava Sheva Port during this time of the year. However, this year the trend is not the same. The figures show that there has been a decrease in exports. Moreover, containers have also piled up at the ports and the number of inbound containers is higher than before.

The CAx value at Mundra Port was 5 times higher compared to the same time in 2020. Moreover, it is 3 times higher than that of the pre-pandemic level. This has been a consistent trend all around the year. At Chennai Port, the CAx values on the 48th week of the year are twice that of 2020. The pre-pandemic trend at this port was decreasing CAx values, because of higher exports. However, this year shows an opposite trend of increasing values till the end of the year.

The situation in Europe

CAx values rise at ports in Europe, heavy container inbounds

The Port of Antwerp recorded a 5 times growth of CAx values in November compared to last year. It goes without saying that a greater number of containers are docked. At the Port of Hamburg, the CAx values are more than three times higher than 2020. The average CAx values at the Port of Felixstowe were 0.65 in the past 3 years, but at week 48 this year, the values are 0.89. CAx values at the port of Valencia are 6X from the last year. The CAx value at the Port of Sines was 0.09 in 2020, while it is 0.85 this year. This is a massive increase. Port of Barcelona also has double the CAx values than 2020.

All the ports in Europe have higher CAx values than 2020 and 2019. Moreover, the concentration of CAx values is in the CAx range of 0.63 – 0.89 which indicates the consistent presence of more inbound containers than outbound containers.

Container availability in the US

The number of inbound containers is higher in the US

In 2020 the CAx values at the Port of Los Angeles dropped from 0.85 to 0.34 in the first week of November to last week of November. This year it has dropped from 0.88 to 0.87 in the same time of the year. At the Port of Long Beach, the CAx values ranged between 0.86 to 0.89 since week 31. In November, this value is at 0.86 and similar values will continue till the end of the year. Even though we’ve noted a drop in these values last year in 2020, the forecast is not showing signs of revival this year due to the current situation of the gridlock.

The CAx values at the Port of Savannah was steadily high all though this year. It ranged between 0.90 and 0.96. This suggests tremendous port congestion and container load of inbound shipments.

The CAx values at the Port of Houston, Texas, in 2020 was half of this year. In November, the CAx at Houston Port was 0.89 while in 2020 it was 0.48. Undoubtedly, the port witnessed an increased burden of inbound containers all though 2021 as compared to 2020 and 2019.

Sea freight trends and challenges: A postpandemic outlook

Posted on 24 September, 2021 | by admin

Globalia member in Porto Alegre, Brazil, explains to us the tendencies and challenges of the sea freight industry and how they are dealing with them

The last one and half years have been a rather tumultuous one for the international sea freight shipping industry. The lockdown and the pandemic-related restrictions had severe repercussions on international trade. Moreover, the container shipping industry is also having to contend with the problems of port congestion and container shortage. In spite of all the challenges, the sea freight forwarders are continuing to move goods across the world offering logistical solutions to keep international trade afloat during these difficult times.

Instability of ocean freight rates

It can be said without a doubt that the container crisis has led to the soaring sea freight rates. Added to this, other issues like limited air freight capacity, overuse of split shipments, changes in shopping trends, and the shortage of equipment also hiked up the shipping costs. As stated by Mr. Fernando Meyrer from the Shipping Department of Clemar Logistics, Globalia member in Porto Alegre, “The values of the freights have increased a lot, and it impacts the entire Brazilian market. If we talk about imports, the rising freight rates also affect the duties and taxes. This means that, besides the international freight, the importers also pay more duties and taxes here in Brazil.”

To cope with this situation Clemar Logistics has been focusing on advance planning of their shipments. “As a company with over 20 years of experience in sea freight shipping, we fully understand how planning can help us serve the interests of our clients. We have a very close relationship with our clients. We make sure to treat our customers’ shipments with priority. For this reason, we plan the shipments beforehand and manage to avoid the delays and surcharges,” adds Mr. Meyrer.

The problem of container shortage

The global container shortage is yet another constant trend in the sea freight shipping industry since 2020. Additionally, the congestion in several ports around the world has resulted in backlogs, delays, and blank sailings. This in turn has further complicated the container shortage problem. Several ports are still trying to deal with the backlog of containers and the situation isn’t likely to improve till the end of this year. Presently, container manufacturers are racing to produce sufficient supplies of boxes to cope with the demand for containers.

Mr. Meyrer explains that “It’s very hard to find containers and all vessels are overbooked. For export cargoes, basically, you have to keep in mind that you will only get a booking for a shipment with a date of departure approximately one month after the request. This is probably one of the most difficult aspects of my job. However, we are managing to cope with this problem by informing our clients about all the steps while optimizing time and resources. Our team works constantly and coordinates with all the parties to successfully execute our customers’ projects.”

Seafreight trends and challenges for independent freight forwarders — Trends in the sea freight shipping industry

Increased dependence on technology

Instead of relying on paperwork, the sea freight industry is now embracing digitization. The Covid-19 induced complications have pushed the ocean freight forwarders to make use of new online platforms. More and more companies in this sector are now increasingly dependent on a host of software that helps with freight booking, quotation generation, spot booking, shipment tracking, and more. All the multinationals like Maersk, CMA CGM, Hapag Lloyd, etc are using artificial intelligence to better serve their customers.

Small companies are also using AI-based platforms to keep up with the competition and make more informed decisions in this volatile situation. Clemar Logistics for example has digitized its manual processes to automate their processes and minimize human errors. “The most important benefit of digitization in this sector is that it is allowing us to offer more flexible services for our clients,” says Mr. Meyrer.

A rise in the use of cargo insurance

Having cargo insurance greatly helps to cover all sorts of risks related to the damage or loss of a shipment. They protect the importers/exporters from substantial financial losses. For example, they will be protected in case of untoward incidents like an accident, natural disaster, piracy, or customs rejection. According to Mr. Meyrer, “The price you pay for the insurance is not even close to the loss you may incur if your cargo is damaged. Therefore, we always suggest our clients to get international insurance on their cargoes.”

Now that we are going through one of the most difficult times for the international shipping industry, the relevance of competent freight companies has become abundantly clear. “Experience, industry knowledge, and the right contacts are some of the most important factors that are allowing us to attract new clients and provide the best logistical solutions. Honestly, I just hope that in the future the prices will stabilize, empty containers will be found easily and the shipping lines will be more committed to sticking to their schedule,” concludes Mr. Meyrer.

We wish Clemar Logistics the very best for their future endeavours!