15 Feb Turbulent Times Result in Rising Rates
With a swirling vortex of compounding factors from the Suez and Panama Canal and peak-season surcharges, to the Houthi of the Red Sea through to the general rate increases, there is no doubt that businesses across the globe are being hit with a whirlwind of new and increasing fees and charges.
These new rate increases are anticipated to endure as they are the consequences of numerous contributing factors that compound such as the militant attacks on shipping in the Red Sea which force carriers into longer routes, resulting in increased costs due to more risks, time, resources and other factors.
The higher costs for shipping containers from Asia to the US are expected to persist through to the start of the Lunar New Year holidays (approximately 10th of February) as demand for US imports from Asia increased from 1.34 million TEUs to 1.37 million TEUs from November to December.
Spot rates from Asia to the US West Coast increased 15% and 17% over the week across the US West Coast and East Coast respectively.
In addition, businesses have been hit with Peak Season Surcharges (PSS) in response to the pre-Chinese New Year surge in demand across the Asia-West and East Coast routes.
Across the other side of the globe, surcharges are being levied on shipments through the Panama and Suez canals, and rising costs are just one of ramifications of challenging Red Sea conditions.
Given the inconsistency in how various charges are being applied across the board, the ever evolving capacity challenges along routes, all which are occurring alongside the dynamic situations that are the Red Sea and other geopolitical conflicts, one can surmise that whilst 2024 has started on a unsettled note, the scope of volatility and the overall impact on rates is yet to be fully determined.
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