Industry News

Freight Rate Update: February 2020

Ronald Vincent | M.E. Dey & Co.

Here is the latest update on current freight rates for both Import and Export cargo. M.E. Dey provides the best possible rates available to our clients by reviewing various carrier options. We’ll keep you advised and informed as trade updates are announced.

IMO 2020 Surcharges

We continue to see a wide range of methods that steamship line are using to apply charges they say are necessary to cover additional costs resulting from the implementation of the IMO 2020 regulations.

Overall, we are seeing increases of $ 100-$250 depending on the lane.

In many cases, carriers have moved away from a separate surcharge and are increasing the quarterly BAF. So the surcharge amount is now part of the quarterly BAF.

Most carriers have set their 1st quarter BAF and included the IMO surcharge. A few carriers are continuing to announce their BAF/IMO surcharge on a monthly  basis.

Recent information published by JOC states that some carrier’s first quarter BAF increased 40% while others increased only 15%.

The wide variation appears to be the result of a) whether steamship lines are using low sulfur fuel versus scrubbers and b) different low sulfur fuel cost projections by steamship lines.

 This is a link to the IMO’s website with additional information on the IMO 2020 regulation: http://www.imo.org/en/MediaCentre/HotTopics/Pages/Sulphur-2020.aspx

 

Trans Atlantic Westbound (import)

 

  • Space is still very tight with vessels sailing at capacity. We encourage customers to book as least 2 weeks in advance.
  • Rates are stable at the moment, but increases may be implemented if capacity remains tight.
  • The U.S. has implemented additional tariffs on some EU origin products. To date the additional tariffs have not impacted shipment volumes and space remains tight.

 

Trans Atlantic Eastbound (export)

 

  • Rates remain stable. Equipment availability has improved, but some origins/carriers continue to have equipment shortages.
  • We encourage customers to book at least a week in advance.

 

Trans Pacific Westbound (export)

 

  • Rates remain stable. Equipment availability has improved, but some origins/carriers continue to have equipment shortages.
  • With some carriers we are having to book 2 weeks in advance.

 

Trans Pacific Eastbound (import)

 

  • Steamship lines continue to announce GRIs for February.  Generally, rates tend to spike in the first 2-3 weeks after Chinese New Year as factories ramp back up. However, the recent coronavirus outbreak may throw a wrench into the traditional rate machinations
  • The Chinese government has extended the Chinese New Year holiday in many parts of China. Under these restrictions the earliest many employees will return to work is February 10th. As a result many steamship lines have cancelled additional sailings as they anticipate very low container volumes throughout February.
  • Thus, at the moment it is a bit difficult to predict where rates will go in February.  We expect rates to drop over the next few weeks due to low demand.  We believe that once factories can ramp back up to full production there may be a surge of cargo.  The result may be a few weeks where space is tight as the backlog is cleared.  This may create a spike in rates.

 

We continue to monitor rates daily and will work to mitigate rate increases wherever possible.


M.E. Dey and Co. monitors the market daily to find competitive rates that pair well with exceptional transportation services. We provide fixed rate contracts in addition to standard market rates. Contact us to talk with a representative or request a quote to get started.

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