The global shipping market is experiencing an unprecedented wave of price increases
Due to the escalation of the situation in the Red Sea and the increasing demand, the freight rates of the major routes continue to climb, with the rate of increase on the European routes being particularly significant. Mediterranean Shipping Company (MSC), Duffy (CMA CGM), Hapag-Lloyd and Maersk (Maersk) and other industry giants have issued a price increase notice, the peak season surcharge also increased.
The latest announcement by Mediterranean Shipping Company (MSC) shows that from May 1, 2024, the new FAK rates from Asian ports to Northern Europe will come into effect. This adjustment covers all ports from Japan, South Korea and Southeast Asia, marking an inevitable trend of rate increases.
At the same time, Duffy announced that from May 15 to 31, Asia to the Mediterranean Sea, the main regions of the FAK rates will usher in a new round of adjustment, of which the Black Sea region of the large container tariffs soared to 6,400 U.S. dollars, the North African region is as high as 7,800 U.S. dollars for the large container. Hapag-Lloyd, not to be outdone, announced that it will adjust FAK rates between Far East and Northern Europe and Mediterranean Sea from May 15th. The price increase affects 20-foot and 40-foot dry containers, including tall and reefer containers, compared with the April 17 price.
Against the backdrop of rising FAK rates, the increase in ocean freight surcharges has added insult to injury. For many forwarders, quotes for May have become exceptionally difficult. In such a market environment, how to provide customers with stable and reliable quotes has become a major challenge for the industry.
This series of price hike notices not only affects the forwarder's quotation strategy, but also puts forward a new test for the cost structure and supply chain stability of global trade. In the face of more uncertainties that may arise in the future, practitioners need to remain vigilant and flexible in adjusting their strategies, as well as strengthening communication and negotiation with shipping lines, with a view to finding the best way to cope with this wave of price increases.
In the face of the current wave of price hikes, as an exporter selling mainly Stackable Black Wire Countertop Fruit Storage, Kitchen Organizers and Wire Wine Rack Bottle Storage Organizer, we suggest the following strategies:
Advance planning: Plan cargo transportation arrangements in advance to avoid the high cost brought by temporary rush transportation.
Diversified logistics: Use multiple modes of transportation, such as combining sea, air and land transportation, to diversify risks and potentially reduce overall transportation costs.
Customer communication: Maintain transparent communication with customers, explaining the reasons for price increases and providing accurate freight budgets and delivery times where possible.
Risk management: Consider purchasing transportation insurance or using factoring services to manage risks during transportation.
Market research: Continuously monitor market dynamics to understand freight rate trends and supply chain conditions in order to make timely adjustments to your strategy.
Supply Chain Optimization: Review the entire supply chain process to identify opportunities for efficiency gains and cost savings.
During this special period, sellers should make every effort to quickly arrange production and shipment, book the cabin in advance, and ensure that the goods can be sent out as scheduled. At the same time, they should be alert to the low price fraud in the market to avoid being deceived.
Reduced capacity and tight space will inevitably lead to higher transportation costs. This cost pass-through ultimately falls on cargo owners, especially those sellers with lower-value cargoes, whose profits are eaten up heavily by freight rates. Market analysis foretells that a continuous rise in freight prices seems to be inevitable in the coming period of time, and it is hoped that this situation will improve soon and normal operation at reasonable prices will be resumed.