The turmoil surrounding ocean freight rates from Hong Kong, China, Taiwan, Korea and Japan appears set to continue in 2017.
Following the rate reductions we negotiated for February 2017 shipment from the above areas, we have started receiving shipping line notices advising of increased rates effective from 1st March, 2017.
Per our earlier Newsletters, it is not uncommon to receive these notices, as under the terms of the Alliance agreement the lines are required by Law to advertise any increases in advance.
The increases being advised at present are USD 300.00/20ft container and USD 600.00/40ft container, this will be the maximum permitted but we would expect these increases will be mitigated according to market conditions. Further information will be advised as we near closer to the implementation date and we finalise our negotiations with the various lines.
Please note any substantial increases is expected to also lead to a rate increase on LCL traffic from above areas.
The rate variations have resulted the shipping lines suffering huge financial losses over the last few years and their confirmation that they are unable to sustain the low rate levels we have become accustomed to in non-peak periods. A number of factors has led to the decline in the industry, including the following:
The financial collapse of Hanjin Line in 2016.
The financial collapse of Great Southern Lines in 2016.
The merger between China Shipping Line and COSCO Line in 2016.
The takeover of Hamburg-SUD Line in 2017 by Maersk Line.
The merging of NYK, K Line and OML Lines in April 2017.
And more recently the announced Merger between Hapag Lloyd and United Arab Agencies expected in the new couple of months.