In the midst of inflated raw materials costs and tariff threats, importers are dealing with higher shipping costs.
The World Container Index (WCI) assessed by Drewry, a composite of container freight rates on eight major routes to and from the U.S., Europe and Asia, was up by 0.6% to $1,495.19 per 40-foot container or its equivalent unit (FEU) for the week ended July 26. The composite index was 6.3% higher than the same period in 2017. The average composite index of the WCI, assessed by Drewry for year-to-date, was $1,385 per FEU, which is $140 lower than the five-year average of $1,525 per FEU.
Rates on Shanghai–Los Angeles and Shanghai–New York routes have pulled up the composite index. Rates from Shanghai to Los Angeles increased $22 to reach $1,653 per FEU, while the Shanghai to New York rate reached $2,731 per FEU, an increase of $54. The rate from Shanghai to Rotterdam, Holland, however, slipped $6 to reach $1,657 per FEU.
Similarly, rates from Rotterdam to New York were down $64 to reach $1,878 per FEU. Drewry said it expects marginal increase in rates for this week.
Fuel prices have been the key reason for the higher rates. And those fuel prices are what made the CMA CGM Group, a major ocean carrier, announce the extension of its Emergency Bunker Recovery Measures last week.
“Because of high oil prices, the CMA CGM Group has decided to maintain the measure to recover this increase,” the company noted. “As a result, as from Aug. 1 (date of loading in the origin ports) until further notice, this measure, based on the Brent average price in June, will be applied to all long-haul cargo worldwide.” The shipper said the emergency rates will be $55 per 20-foot container or equivalent unit (TEU) for dry containers and 85 per TEU for reefer or refrigerated containers.
In May, CMA CGM and other ocean freight carriers instituted “emergency bunker recovery measures” to counter a hike in the price of the main source of fuel for container ships. At the time, CMA CGM joined 2M Alliance members Maersk Line and Mediterranean Shipping Company in implementing a surcharge. The price of Brent crude oil futures closed at $74.77 on Monday, up from $74.29 on Friday and $72.21 on April 30.