The price to hire a shipping container from Shanghai to Sydney
has doubled over the past year. (Image – ABC News: John Gunn)
Impact on Imports
Australian freight forwarders and their clients are facing the biggest rate increases since the beginning of the Coronavirus pandemic. And nowhere is this more evident than on import consignments from China. The challenge is coupled with port congestion and wharf-side inefficiencies which are soaking up huge amounts of capacity.
Space on vessels is still tight, delays are common and freight rates just keep rising – the latest set of carrier GRIs have pushed China-Australia freight rates for 40 ft FCLs in the second half of August to around double what they were a year ago.
In China, congestion is worsening in both Shanghai and Ningbo, a possible early warning of the coming impact of new Covid restrictions. Indeed, speculation is mounting over the possible impact of another nationwide lockdown in China. So far, the main impact is on vessel crew, who face additional testing and restrictions on change-overs.
Effects on Exports
Over the year to May 2021, the median cost of shipping a 20ft export container from Australia to China increased by almost 40%.
Exporters also face significant delays, particularly for transhipment cargo. Transhipment ports such as Singapore and Port Klang are significantly backlogged. And shipping lines [in Australia] are being advised that they cannot load vessels to capacity, as the transhipment ports have more than enough containers on hold already. The most extensive delays are to the subcontinent, with some exports to India having a six-week booking delay, for example.
Not only is shipping capacity a major problem, but exorbitant container detention penalties are causing significant tension between shippers and carriers, with some waiting weeks before securing bookings only to see blank sailings and their cargo being bumped.
Vietnam Update
The lockdown in South Vietnam has caused a 100,000 TEU pile-up at Ho Chi Minh City’s Cat Lai port. The container yard density at Cat Lai is currently around 85%, although 2,000 containers were cleared a few days ago. There are still equipment shortages, which have persisted since the pandemic began, and there have been five freight rate increases so far this year.
Many factories in the country had closed or reduced production to 50%-70% during the lockdown. Some factories are expected to reopen next week, meaning empty container availability could get worse before it gets better.
For information on freight rates, shipping schedules and delays, talk to us here at Colless Young. As licensed Customs Brokers and International Freight Forwarders, we offer correct, professional advice on all your import and export cargo shipping needs. We provide a complete range of logistics services, for both air and sea freight, including fumigation, warehousing and trucking – through all Australian ports and airports.
