Shipping company announced plans to suspend trans-Pacific routes in March, Hapag-Lloyd and CMA CGM levied new surcharges, and demand for Asian cargo remains strong

Although demand has slowed after the Spring Festival, shipping companies have suspended some sailing plans, and shippers and shippers have complained about container shortages and planned delays. However, shipping companies and freight forwarders are optimistic that freight rates will soar in the foreseeable future. The volume will remain at a high level.

According to forecasts by the World Bank, taking into account the COVID-19 vaccination and the government's economic stimulus measures, global GDP will grow by 3.7% this year, and freight demand will remain strong, which will pose challenges to containers.

▍Mediterranean Shipping Announces Trans-Pacific Suspension Plan in March

Mediterranean Shipping (MSC) recently announced that due to the reduced market demand after the Chinese New Year, starting from the 9th week of March 1, it will adjust the capacity supply of the Asia-North America (US and Canada) routes and suspend some voyages.

According to the announcement, the following voyages on the Asia-North America (U.S. and Canada) route will be suspended:

Santana route: the UX110A voyage departing from Yantian Port on March 7th, calling the port order of Yantian-Shanghai-Auckland-Los Angeles;

On March 22, the UX113R voyage departed from Auckland, and the port of call was Auckland-Los Angeles-Yantian-Shanghai.

Chinook route: The UK109A voyage departing from Yantian Port on March 2, with the port order of Yantian-Shanghai-Busan-Vancouver;

For the UK111A voyage that left Yantian on March 18, the port of call was Vancouver-Yantian-Shanghai-Busan.

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Mediterranean Shipping Announcement
▍Hapag-Lloyd and CMA CGM levy new surcharges

In order to cope with recent market changes and ease the congestion at the West Coast of the United States, the two liner companies, Hapag-Lloyd and CMA CGM, have announced that they will levy new surcharges on trans-Pacific routes starting in late February.

Hapag-Lloyd recently announced that starting from March 15th, it will charge a comprehensive rate increase surcharge (GRI) for voyages from East Asia to the United States and Canada. This fee applies to dry containers, reefer containers, storage tanks, and open containers. For all types of containers such as top box, the charging standard is 100 USD/TEU and 200 USD/FEU.

In addition, Hapag-Lloyd introduced the peak season surcharge (PSS) ahead of schedule. From March 1st, it will charge a PSS of US$875/TEU on the Far East to Nordic route.

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The peak season surcharge (PSS), which was introduced early and in advance, further proved the shipping company's confidence in its booking visibility in the second quarter. A UK-based non-vessel carrier said that since the end of last year, the short-term freight rate provided by a shipping company has "more than quadrupled."

In addition, Hapag-Lloyd also stated that due to the shortage of terminal labor and the decline in productivity, the port of Auckland continues to be congested. Therefore, starting from February 20th, the port congestion surcharge will be charged for goods transshipped through the port of Auckland, at a rate of US$250. /TEU.

CMA CGM issued an announcement that due to the current shortage of refrigerated containers, from the West Coast of the United States (Seattle and Tacoma) to all destinations in the world, CMA CGM will increase the Empty Equipment Imbalance Surcharge (Empty Equipment Imbalance Surcharge). The new charging plan will take effect from March 1, except for the refrigerated cargo owner's own container (SOC), each refrigerated container will be charged a surcharge of 650 US dollars.

▍The freight rate from Asia to the east coast of South America has fallen, and the demand is still strong

Local shipping executives said that although continued demand continues to limit the supply of ship spaces and containers, container freight rates from Asia to the east coast of South America have begun to fall from record highs.

Carlos Fuchs, director of Royal Cargo, a freight company based in Itajai, Brazil, said that he expects freight rates from Asia to the east coast of South America to stabilize at US$8,000-9,000/TEU in the next few months.

Fuchs said: "Compared with the price of nearly US$100 million per container in January, the current price is more stable and slightly lower." "My personal expectation is that when the peak period of container shipments ends after the Spring Festival, Shipping costs from Asia to the east coast of South America will be slightly lower."
In addition, an executive of a container company who asked not to be named said: "The freight rate is stable and there is no sign that this situation will change in the near future."

According to Fabrizio De Paulis, managing director of consulting firms De Paulis Logistics and SCM Eireli, as of the end of February, the average booking price from Asia to the east coast of South America was US$8,000 per container, and the average return trip from the east coast of South America to Asia was 2,000. USD/TEU.

Paulis said: “I think the outlook for the next few months will remain the same.” “Based on the communication with the carrier, I don’t think the freight rate between Asia and the East Coast of South America will drop in the next few months because it will be Maintain current capacity in the short and medium term."

This is partly due to the prolonged peak season of the much larger and more profitable trans-Pacific trade between Asia and North America, which slowed the return of containers and caused an actual shortage of containers around the world.

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Paulis said: "Due to strong demand and shortage of ships and containers, freight rates will remain at a similar level." "Trans-Pacific routes will continue to suffer from insufficient space, and carriers will allocate containers on routes with higher freight rates. Load cargo."

Rogério Fadigas, the director of Cargofast Logistics, a freight forwarder in São Paulo, said that the current freight for each container is between US$8,700 and US$9,100, adding that Cargofast has to communicate with carriers in Asia, "to ensure that our booking can find a space. And containers."