Sea Freight Rate Update – Oct 14

It’s tough to estimate the cost of shipping in advance when importing goods from China to the UK (or from Asia to Europe generally) as a full container load.  The yo-yo sea freight rates that were seen in the first half of 2014 have not stabilised in the second half of the year.  In fact, rates have tumbled.

In October, the cost to ship a container of goods from China to the UK is as low as it has been since the same time in 2013…. But it’s the same old story.  The shipping lines have announced rate increases from the 1st of November of nearly USD $1000 for a 20ft container and $2000 for a 40ft container.  Their hope is that they will be able to maintain a higher rate for November and December as they did last year. The cost to import a part container load shipment from China doesn’t fluctuate much at all but the prices for full container load shipments are very unstable.

The winter period sees an annual reduction in the demand for containers shipped from Asia to the UK and as a result the shipping lines adjust their services accordingly.  This allows them to keep the services that they do run, as full as possible, thus preventing the rates from falling.  A number of shipping lines have already announced multiple cancellations.

In 2014 the trend has been that the rate increases have not lasted for long and the rates have declined fairly quickly after they have been implemented.  However, on this occasion there is a bit more confidence from the shipping lines that they will be able to make the increase in November stick.

We aren’t totally convinced by the shipping lines’ confidence but since they are removing a ship or two from service we think that now is their best chance to secure a bit of an increase.  We expect there to be a large increase implemented in November that will only partially be sustainable.  We then expect another increase in December which could push the prices up a bit more.  In 2014, Chinese New Year was early which allowed the shipping lines to keep the rates high in January but as its not until mid February in 2015 there may be calm before the storm!

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