Asia-Europe spot rates head for $20k as new China Covid problem unfolds

Published on: 14th June 2021

The new problem has prompted suggestions that the current shipping delays could persist for up to another 12 months.

According to a report in The Loadstar, shipping companies will be introducing further rate increases this week, with FAK rates from Asia to North Europe edging towards $20,000 per 40ft. This would represent an astonishing 1,000% increase on the spot rate for the trade a year ago.

In addition, transpacific routes will also be affected, with some Asia to US carriers now asking $17,000 per 40ft for US east coast ports.

It is now being suggested that these sky-high rates are starting to cause cancelled orders from China, with retailers concerned about selling stock at increased prices, while many suppliers are finding it difficult to hold previously negotiated prices.

One UK forwarder described the current situation as “bedlam.” The main driver of the new raft of rate increases across virtually all trade lanes is the Covid crisis at the southern China ports, particularly Yantian, where there were reported to be up to 40 vessels waiting to berth last week.

Speaking to the BBC, Nils Haupt, communications director at the German shipping line Hapag-Lloyd, commented: “One of the biggest ports in China has basically closed down for close to three weeks. They have some berths in operation, but nowhere near enough.” Over the past few days, shipping lines have been diverting vessels away from Yantian to other nearby terminals in the Delta area. However, according to Mr Haupt, that has been creating its own problem: “You can use ports like Shekhou, you can use Nansha, you can use Hong Kong; but what we’re seeing right now is that delays are piling up there as well”.

According to Peter Sands, chief shipping analyst at the industry organisation Bimco: “The issue with Yantian is that we need more transparency and openness from the local authorities. And we aren’t getting that, which means there is a lot of uncertainty in developing contingency plans.”

The hope within the shipping industry is that the situation in Yantian will be resolved as rapidly as possible, although some experts have suggested that when that happens, it will lead to a surge in shipments from the region, which could cause further bottlenecks elsewhere in the supply chain. James Baker, containers editor at shipping industry publication Lloyd’s List told the BBC: “Because the system is so overloaded, every time one of these things happens now, anything else just adds to the problem.” As a result, he expects the disruption to continue for up to another 12 months, with importers in Europe and North America potentially facing a longer wait than normal for their goods.





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