Freight rates on some routes up over 50% since late April amid tight supply

Freight rates on China-North America shipping routes have risen sharply in recent weeks as importers from the United States stepped up inventory replenishment and global shipping capacity tightened, said freight forwarders and industry analysts.

They said space on US-bound routes has remained in short supply, with most capacity already booked through June. Freight rates on some routes have jumped more than 50 percent since late April amid strong demand and constrained vessel capacity.

At Pros-Forest Logistics, an international freight forwarding company based in Ningbo, Zhejiang province in East China, staffers repeatedly refreshed shipping lines' booking systems, closely monitoring the latest slots available. Securing vessel space and obtaining empty containers have become the company's top priorities in recent weeks.

READ MORE: Sino-US trade consultations key to global stability, growth

Jiang Lei, the company's president, said that since May, shipping routes between China and the US have been fully booked. Vessel space has become extremely tight across East and South China, with cargo frequently being rolled over to later sailings.

"Most of the available capacity for June has already been reserved. Overall, the market has returned to the kind of tight conditions typically seen during the peak shipping season," Jiang said.

At the end of April, the freight rate for a forty-foot equivalent unit from Ningbo to ports on the US West Coast stood at about $2,900, while rates to the US East Coast were around $3,900, she said.

Following several rounds of increases, rates have now climbed to nearly $5,000 for the US West Coast and close to $6,000 for the US East Coast. Meanwhile, several shipping lines are planning further rate hikes on US routes in mid-June, said Jiang.

At a warehouse operated by Ningbo Ruiyuan Logistics Co, a freight forwarding company in Ningbo, consumer goods from Jiangsu and Zhejiang provinces are gathered before being shipped to North America.

"From late April to late May, the warehouse handled an average of 70 to 80 FEUs per day, surpassing the shipping peak seen ahead of the Chinese New Year holiday this year," said Hu Wanying, the company's executive vice-president.

Qian Hanglu, an analyst at Ningbo Shipping Exchange, said that on the supply side, more than 300,000 twenty-foot equivalent units of container shipping capacity have been stranded in the Gulf due to tensions in the Middle East and disruptions to traffic through the Strait of Hormuz.

ALSO READ: Growing role seen for intl use of RMB

Meanwhile, the resumption of normal shipping through the Red Sea has been delayed, forcing vessels to continue taking longer routes around the region. The decline in vessel turnover has effectively reduced available capacity and added further upward pressure on freight rates, Qian said.

"We have also observed that vessel speeds across the container shipping market have been declining. Shipping companies are slowing down, primarily to reduce fuel costs. This will effectively reduce available global shipping capacity," she added.

Exports from Ningbo's ports to the US totaled more than 290,000 TEUs in May, with cargo value exceeding 36 billion yuan ($5.3 billion), up more than 25 percent year-on-year. Major export categories included mechanical and electrical products, apparel, textile products and household goods, said Ningbo Customs.

Contact the writers at zhongnan@chinadaily.com.cn