Industry News

Freight Rate Update: November 2019

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 – What is it and how will it affect ocean freight rates?

The International Maritime Organization (IMO) is the United Nations specialized agency that is responsible for the safety and security of shipping and the prevention of marine and atmospheric pollutions by ships.

IMO 2020 is the latest regulation from the IMO to reduce the allowable sulphur in ships’ fuel oil also known as bunker fuel. The objective is to reduce suplhur emissions from ships by 77%.

This is a link to the IMO’s website with additional information on this regulation.

What does this mean for companies that utilize ocean transportation services?

The regulation will increase costs to carriers for fuel and/or to retrofit their vessels with an exhaust cleaning system. These additional costs are expected to be passed on to shippers in the form of rate increases and/or additional surcharges such as a low sulphur surcharge (LSS).

Some carriers have already implemented a low sulphur surcharge as they have converted to the newer fuel or retrofitted their vessels. We have seen surcharge amounts ranging from $ 20 – $ 50 per container on some lanes. Other carriers have indicated that they will roll the additional fuel costs into their quarterly BAF.

At this time, a standard has not been adopted industry wide and we expect diversified methods to be implemented by carriers to recoup additional fuel costs. As well, most carriers have not announced surcharge or rate levels for 2020. We will continue to monitor the industry and provide updates to our customers.

 

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.
  • 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. It will be interesting to see how this will affect shipment volumes.

 

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)

 

  • After the Golden Week holiday, capacity has tightened due to shipping volumes as well as the steamship lines ‘blanking’ aka canceling sailings.
  • The steamship lines have continued to cancel sailings in November to reduce excess capacity.  They are hoping that this will allow them to push through a rate increase in November that will hold for more than a few days.
  • As we have reported in past newsletters, there are industry feeds that say we should expect a substantial rate increase to last throughout November and then the next day we see a different source state that shipment volume is decreasing and thus there is not enough demand to support a rate increase.
  • We have seen some shipments rolled in the past 2 weeks due to capacity issues.  This is the first instance we have seen this year.
  • Our estimate is that space will be tight through the first 2 weeks of November and then we may see spot market rates decline through December.
  • It is important to keep in mind that Chinese New Year is earlier in 2020 than it has been the past few years.  It is January 25th.  With most Chinese factories closed for at least a week, we expect significant rate increases at the beginning of January.


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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