The world is still reeling from the Suez Canal disaster since late March 2021
The Suez Canal disaster which forcefully halted world trade for a week caused a string of maritime crises. American and European ports battle intense congestion as several vessels were compelled to change course just to meet delivery deadlines. What was not mentioned however, was if this chain reaction brought about another series of economic predicaments.
Shipowners’ and Charterers’ market
Shipowners and charterers are accepting consignments and smiling their ways to the bank. The Suez Canal blockage caused several vessels divert to alternative locations, which resulted in continual congestions across the United States and Europe.
Suffering the most pressure is certainly the supply flow from Asia to the United States and Europe. Retailers operating on the “Just-in-Time” model to avoid over-stocking, on a more conservative sales projection will not be exempted from risks in the already wounded market. In any case, orders are pouring in. The real question is: are there enough transportation resources to meet the demand?
Shipowners and charterers have flagged out the possible delays due to equipment shortage, and aborted voyages. Unfortunately, all parties including retailers may need to roll the dice and hope for the best. Heightening the anxiety is the persistent climbing rates and surcharges to prevailing inflated prices. These costs are likely to be passed to the consumers – inflation.
Significant rates hike
The route between Asia and North Europe increased by 7 per cent, clocking at reported a new high of $8,945/FEU, or $4,473/TEU. The price for US East Coast to Asia backhaul soared by 25 per cent to $1,022/FEU or $511/TEU. However, rates for routes between Europe and North America declined to $4,274/FEU, or $2,137/TEU. This is actually a whopping 90 per cent surge since early 2021.
The rates for Asia and US East Coast increased by 1 per cent to $7,481/FEU ($3,741/TEU), which turns out to be a 173 per cent increase compared to late May 2020. Prices for Transpacific Asia and US West Coast declined to $5,473/FEU ($2,737/TEU). Though it is a 3 per cent decline, it is still a colossal 218 per cent climb compared to May 2020.
To mitigate these challenges, cargo owners and charterers can look at Marine Online’s network of suitable vessels to fulfil consignment deadlines at competitive rates.