Rate-Trends_2020-01_Adobe_189826945

Rate Trends – 1st and 2nd Quarter 2020

For the beginning of the year 2020 increases in rates and surcharges must be expected.

Bunker Surcharge Increases

Carriers report the cost of IMO compliant Very Low Sulfur Fuel Oil {VLSFO) increased substantially in recent weeks. Transpacific importers, therefore, must expect bunker (Surcharge) increases of $ 50/TEU to $ 75/FEU to apply as of March 1st, or Apr. 1st, depending on whether a carrier adjusts Bunker Surcharges on a monthly or quarterly basis.

When comparing your cost between carriers you want to be sure to look at your all-in cost i.e. Base rates plus Bunker Charges – because the Bunker Charges applied by the carriers are varying sometime widely, depending on their base rate levels.

General Rate Increase

Base Rates of Service Contracts are likely to increase by about $ 150/FEU to $ 200/FEU on May 1st, as carriers will continue to void sailings in order to balance available cargo volume and vessel space availability.

A novel Panama Canal Low-Water Surcharge?

Because of low water levels in the Panama Canal during summer months, carriers may be tempted to impose a novel “Low Water-Level” surcharge of perhaps $ 25 to $ 50 per TEU on containers being delivered from Asia to U.S. East Coast ports.

Peak Season Surcharges

Since the carriers have shown they are determined to better manage vessel space availability I expect they will succeed in collecting Peak Season Surcharges of about $ 150/FEU to $ 200/FEU during the July – Jan shipping season of cargo volume is relatively strong.

Hyundai adding Ultra Large Container vessels

In my opinion, Hyundai’s addition of up to 20 mega containerships to their fleet will have little impact on Transpacific Rate levels, as just about all of them will most likely be deployed in Asia-Europe trade lanes.