Ocean rates were stable this past week, kept up by tightened capacity to meet the low demand. Some carriers announced they were reinstating a small number of sailings from Asia to the US in June, and others announced increased rates to Europe from Asia. This may be partly due to carriers overestimating how low demand would fall, but there are also signs of increases in bookings. Some forwarders report a muted seasonal-driven uptick in US orders, while some indicators suggest supply chain activity is picking up in Europe as many countries ease restrictions. Shipments out of South East Asia indicate that while China has regained its pre-COVID-19 level of interest, it is no longer as dominant as it was last year, with its share dropping 5 percentage points to 90%. China-US West Coast prices (FBX01 Daily) down by 2% since last week to $1636/FEU. Rates are 32% higher than rates in 2019 at this time. On a positive note China-US East Coast prices (FBX03 Daily) are just 1% lower than last week, reaching $2578/FEU, and are even with rates for this week last year. However, Shanghai Containerized Freight Index spot price per 40-foot equivalent unit for transport to the U.S. West Coast recently reached $2,097 last week, up 25% from the week before to the highest price this year.
What are Incoterms?
The INternational COmmerce Terms (Incoterms) were created by the International Chamber of Commerce (ICC) in 1936. The latest version of Incoterms, released in 2010 includes 11 separate codes for various modes of transportation. The terms are anticipated to undergo revision in 2020.
What Is Freight Class?
When determining the price necessary for shipping freight Less-Than-Truckload (LTL), all carriers abide by the standard Freight Classification System established by the National Motor Freight Traffic Association (NMFTA) and published by the National Motor Freight Classification (NMFC).
In a market punctuated by increasing demand, increasing production, and decreasing carrier availability, shippers are in a race to find carriers to ship their freight. Problems often arise when contracting out carriers due to 1) the shipper’s lack of a carrier network and 2) limited market information.
With all the uncertainty revolving around the logistics industry there is one thing that is constant – freight rates are rising. According to a report issued by Bloomberg midway through this year, spot rates have increased by 28% compared to 2017. Trans4cast reports that rates continue to make new record highs with no end in sight. It is projected that rate hikes will slow down in 2019; however, with a slew of new tariffs coming into effect in January, and FedEx and UPS announcing rate increases of 4.9%, it is clear that shippers will not be able to catch a break any time soon.