Exports are getting more and more expensive

Ports account for around 90% of freight transport worldwide, and export costs have skyrocketed. The Valencia Container Freight Index (VCFI), an index created by the Valencia Port Authority to reflect the evolution of export market rates for sea-loaded containers, shows that exports are getting more and more expensive. According to this index, in May, costs increased by 2.09% compared to the previous month and grew by 375.13% since 2018, when the series started. Exports are almost four times more expensive than they were four years ago.

The reasons for this increase in freight prices are many. High demand from port traffic, rising marine fuel prices, and congestion at some American and Asian ports were noted last year and so are now. There is a tension in maritime transport that is intensifying in a few companies. The five major shipping companies, using almost all their ships with virtually no empty fleets, move the world and are the main custodians of container traffic. MSC, Maersk, CMA CGM, Cosco and Hapag-Lloyd control three major shipping alliances that manage 80% of world traffic. And freight prices skyrocketed. Shipping companies are resorting to rising fuel prices to justify the rise in freight costs. Fuel prices have tripled since 2020.

“Logistic problems are likely to increase again after the summer due to the new covid outbreaks and the new rise in energy prices, but it is also true that it is necessary to see how the increase in interest rates is affected. Which in principle requires a decrease in investment and demand, so as the demand for goods and services decreases, not many ships will be needed, ”explains Joan Tristany, Amec, the international association of companies.

Streamline the service

At the port of Barcelona, ​​they acknowledge that they are currently working “24 hours a day to speed and facilitate the entry and exit of containers as much as possible and prioritize the entry of full export containers scheduled to be shipped in less than seven days”.

An example of the tense situation last week was the US decision to clear congestion at the country’s freight ports, whose logistics activities have been at half-gas for months due to the effects of the pandemic. A new law prohibits carriers with ships in U.S. ports from rejecting U.S. customers “without good reason” who wish to export their products, for example, to Asia, and regulates the rates applicable to them.

United States President Joe Biden criticized the high rates and “unfair practices” of shipping companies and directly linked them to the high inflation the country was experiencing, 8.6% in May: “During the pandemic, these Carriers have increased their prices by up to 1,000% in some cases. “The US now often refuses to load its containers and comes back to Asia empty-handed. It’s costing farmers and our economy a lot.”

Shippers and shippers allied themselves with each other while criticizing the dominant position of the major maritime operators. MSC and Maersk are combining efforts on the main routes with a fleet of 1,400 ships under the 2M Alliance. CMA CGM, Cosco and Evergreen join forces with 352 ships on Ocean Alliance Day6. Hapag-Lloyd, ONE, Yang Ming LINE and HMM are grouped under The Alliance. It is feared that this period of high prices in the industry will open a new era of trade and that a significant portion of this extra profit will be diverted from shipping companies to companies in the logistics and distribution field. Large shipping companies would then not only dominate the sea, but would also control the handling of cargo at terminals or the use of intermodal services until they embrace a full international freight forwarding concept. All this in a few hands.

Source: Informacion


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