Industry News

Freight Rate Update: October 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)

 

  • Throughout most of September space was available and market rates continued to drop after the first week of September.
  • There was a slight uptick in bookings towards the end of September due to the Golden Week holiday in China at the beginning of October.
  • We expected space to be tighter in September, but the predicted ‘mini peak’ was only a ripple.
  • Indications from manufacturers and steamship lines are that advance bookings for October, November and December are weak. It is expected that carriers may try to cancel sailings to control capacity and hold to higher rate levels. At the moment, predictions are that spot rates will continue to fall after Golden Week.


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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