The United States’ import container fees are back to what they were before. The amount that the US exports has not changed. Even after the COVID spread, U.S. export prices are still more than 10% higher than they were before.
Peter Friedmann, who is in charge of the Agriculture Transportation Coalition, says that rates are not exports’ biggest cost worry.
He told FreightWaves that ships are now leaving at random times and that communication between ocean companies and exporters is worse than ever.
Exporters now spend more on holding and demurrage, as well as storage and shipping, than they did before 2020. This is because they don’t have enough information about how unpredictable travel schedules are.
Friedmann stated that the primary issue is not higher rates, but rather the carriers’ inability or unwillingness to provide timely and accurate data on things like ERD, the ship’s arrival, and the designated cargo terminal, which imposes additional costs on exporters.
Spot and contract rates still elevated
After the supply chain problem was over, the rate of imports went back to (or even went below) what it was before the pandemic. Export growth rates haven’t changed in the same way as the markets have, at least not yet.
Drewry’s World Container Index (WCI) in the United Kingdom said that the spot rate for the Los Angeles–Shanghai route was $838 per forty-foot equivalent unit for the week ending on Thursday. WCI’s price per FEU from New York to Rotterdam was $734. Even though these numbers are lower than when they were at the height of their epidemics, they are 66% and 27% higher than they were five years ago.
But import prices went down. From September 2018 to January 2019, the WCI Shanghai-Los Angeles spot index went down by 9% and the Shanghai-New York index went down by 16%.
The long-term contract rates watched by the Norwegian company Xeneta follow the same pattern: they are going down from their record highs but up from their levels before the epidemic.
Long-term prices for dry shipping containers in the West Coast-Far East trade rose 39% from mid-September 2019 to $1,171 per FEU as of Sunday. The average cost of a 20-foot chilled container per year is now $3,732. This is a 32% rise from the prices that were looked at four years ago.
Xeneta said on Sunday that average long-term prices in the transatlantic westbound trade between the U.S. East Coast and North Europe were $909 per FEU (for dry containers, non-reefer), which is a 13% increase from mid-September 2019.
‘The biggest challenge right now’
Friedmann talked more about the rate problem by explaining how the import side’s carrier service method and lack of up-to-date data have caused exporters to pay more than they did before the pandemic.
He said that the inbound cargo determines the carriers’ placement of ships and services. Their primary concerns when making that determination are not export volumes and revenues. Import volumes have dropped, causing carriers to adjust and continue adjusting. The erratic schedules are still a concern, and it is uncertain how long they will persist.
The decision to cancel a sailing is not made three days before the ship is supposed to call at the terminal. Carriers are not providing that information immediately upon making a decision. He asked.
The user mentioned that when they go to the airport, their phone receives multiple text messages notifying them about flight delays of three minutes or changes in the departure gate from E26 to E31. The flights are only a few hours long. Exporters are questioning why ocean carriers are unable to provide them with the specific details of the date, time, and terminal of arrival for a two-week voyage.
Our agriculture exporters spend countless hours on the phone trying to determine the appropriate terminal for their exports. The ocean carrier people will state that they are uncertain. You should call the terminal.
People may not necessarily enjoy paying higher freight rates, but it is possible to budget for such expenses. It is impossible to budget for situations where a carrier cancels a sailing or skips a port without prior notice, or when a terminal is closed. These unexpected events result in additional costs such as storage, production, trucking, detention, and demurrage charges, which can be significantly higher than the freight rates. The biggest challenge right now is that.
Exports trending better than imports
Since export demand has been much more steady, it makes sense that the United States’ export rate hasn’t dropped as quickly as its import rate has over the past year.
Friedmann suggests that one reason for this is that certain imported goods are more discretionary for the end consumer. There is no discretion on the export side. The ultimate consumers consist of animals that require sustenance. There are hogs in China that require our soybeans, cattle herds in Japan that require our hay, and a construction industry that requires our lumber.
John McCown is an independent researcher who keeps track of shipping action at the ten biggest ports in the United States. Exports from the top 10 ports went up 1.2% from July of last year to July of this year. Imports slowed down by 16.7%.
The three-month trailing average of the change in imports and exports is also tracked by McCown. Imports outperformed by a wide margin during most of the pandemic period. He wrote that the trend lines crossed at the end of last summer and export volume growth has outperformed import growth since.
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