Up and up and up!

Some of you may not have heard about the GRI from 1st March 2012 from almost all shipping carriers yet. But you will likely feel the pinch when you notice shipping prices for containers almost doubling after 1st of March.

Here is what is happening and what we’re being told:

 

Where & What?

The increases will be applied as follows:

Origin Range: From All Asian ports (including Japan, South East Asia, Colombo and Bangladesh)

Destination Range: To all Northern European ports (including UK & Ireland and the full range from Portugal to Russia) to West Med, Adriatic, East Med, Black Sea and North Africa.

Cargo: Dry cargo, OOG’s, Paying empties, Break-bulk and Reefer cargo.

 

Why?

While some carriers aren’t even offering an explanation for this price hike, others are using a variety of differing excuses. The most common the reasons being offered are:

  1. A fuel surcharge – Increasing fuel prices which truthfully account for between 30-50% of this rate increase in most cases.
  2. 2011 adverse weather conditions causing extended periods of port closures and therefore the carriers loss of revenue.
  3. A shift in the balance of the rate of containers heading westward and eastward, storage and canal charge changes.
  4. 2011 saw an unprecedented decrease in container shipping rates that has been reported as unsustainable for these carriers coming into 2012.

It’s terrible to think that these carriers can switch and change rates so significantly in such a turbulent and sensitive time for European and Asian trade. Most companies have already made their 2012 projections based on last year’s shipping rates and for the most part make concessions for minor rate changes.

However, as you will see below, the rate change is huge and will ultimately be passed on to the consumer or final buyer. This is not ideal for imports to Europe at all, and this will be even more damaging for SME’s who haven’t recognized this change yet!

Mine is fourth row, third from the left, please!

How Much?

We’ve summarised the rate increases from the following companies below. These figures are the increase on top of the existing rates which lie at about USD 700/teu. All told, it is about double the current rate level!

  • K Line – USD 725/teu
  • Hapag – USD 750/teu
  • Maersk – USD 775/teu
  • MOL – USD 750/teu
  • CMA – USD 750 teu

Note: TEU is short for Twenty-Foot Equivalent Unit which means a 20ft container. A 40ft container is 2TEU or FEU (Forty-Foot Equivalent Unit). As the above rate increases are based on a 20ft container, if you are preparing to ship a 40ft container after 1st March, prepare also to double that increase!

Toying with the careful balance of shipping rates

Be Prepared!

It goes without saying that these rate hikes affect LCL shipping too, causing potential strife for all the SMEs and young companies looking East for their goods. Shop around and make sure you are getting the best competitive prices!

Please be aware the rates will be changing from month to month as usual, but this significant rate hike takes the new base line up a big step. These rates will apply for all freight on board from 1st March.

If you have any questions or need extra information please let us know.

(Thanks to Ciaran McCann for providing supporting information)

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