Since September 2020, the freight cost started moving up everywhere. It increased from $3300 to $4500 per 40HC. The loading port is Hochiminh/ Haiphong of Vietnam. And the destination ports are the US and EU ports
That was the beginning of a new depression in International Transportation.
(Freight cost from Vietnam to EU ports increased from $1800 to $12,500 per 40HC)
In October 2020, some shipping companies such as CMA, Mearsk called $4500 – $5000 per 40HC. Shippers/ Importers were thinking about a new joke from carriers and wait for better freight cost. However, things might be out of any best prophets in the world.
The rates continued increasing from $5000 to $6000 in November. And then it was $8000 – $9000 in first weeks of December. In additional, the biggest carriers have been telling that they do not have enough empty containers for transportation. Even shipper paid high freight cost. However, the shipping comapnies might cancel the booking if any other ones pay higher to them. The issues are much worse while the ending weeks of the year is always peak season for exporting from Vietnam. Hence, shippers are paying higher and higher freight cost to obtain the empty containers. Thus, in the last week of 2020, it was quoted $12,000 per 40HC from Vietnam to EU ports. Which was $1400 – $1800 per 40HC in 6 months ago.
(Ports congession in the US – containers problem)
The vessels are being delayed their ETD for 2-3 times at least. And with new Actual Departature, the new freight cost will be applied. For example, the booking from Hochiminh to the Newyork was quoted $6500 per 40HC for ETD Dec 15th. However, the Feeder Vessels were delayed. Hence, Actual Departure Date is Dec 25th. Thus, the shipping company charged $7800 per 40HC to the shipper.
Moreover, even the shippers paid high expense to take the bookings from Carriers, they might have no empty containers at ports due ot shortage.
This Depression Never Seen Before.
Logistic Companies are telling about an earlier Lunar New Year Holidays. They do not have anything to do in this situation. When freight moved up too much, the importers stop buying goods. Hence, the supplying chain is freezed.
What are the reasons?
1. The Chinese exporters paid 10 times higher freight than Vietnamese and other countries to take most empty containers of the world. Their economy was healing faster than other countries. Now their industries are exporting lot of cargos to fulfill the miss contracts in middle of the year. With much higher freight cost paid from Chinese, the Carriers send their containers to China to take more margin.
2. Due to Covid-19, the main ports in the US, EU are being congession. Lot of containers are left in the ports. Thus, there is a huge shortage of empty container sending back to exporting countries.
3. Covid-19 caused a deep decrease in economy of most countries. Hence, the total demand is lower. The transportation is also less. So the shipping companies have to cut some vessels. They keep only the main transportation. Therefore, this makes a shortage in voyages as well.
When will this transport depression end?
Talked to some shipping lines such as CMA, Mearsk, Happag Lloyd, we were told that the situation will not be better after the first quater 1 of 2021. Most importers were expecting the freight cost would be better from January 2021. However, the rates were quoted in January at $12,000 per 40ft. Which is 30% higher than the freight was in December. When will this increasing trend end? It will end when the empty containers would be available enough for transportation. It will end when ports congession finish. And it will end when the fear of Covid-19 faded.
In Vietnam, most biggest exporting companies in Vietnam are being affected. Mr. Phan Minh Thong, the chair man of Phuc Sinh Corp said “We used to export 40-50 containers per month. Now we can ship 10-12 containers. The cost for freight moved up from $180,000 per month to $700,000 per month. We could not buy black pepper, coffee even it is the new season now. Because we could not sell, so we could not buy”.
(Letter from Vietnamese Ministry of Commerce to Ministry of Transport regarding to containers problem)
The Vietnamese Goverment sent letters to shipping lines in December. Asked them to send more empty containers to Vietnam from January. We all hope situation would be better in the end.