Maritime trading is an indispensable global necessity, but international economic conditions are making it difficult for liner shipping operators to efficiently carry out ocean trade.
Last March 2012, it was reported that freight container rates went up 114%. This April, the rates were once again raised by 28%. Container freight rate sub-index for Asia to Europe trade, particularly the Shanghai-Rotterdam route, is now $3,408/40ft as of April 5, up by $754 per feu from March 29’s $2,654 per feu.
These rate hikes are expected to continue well into May, with shipping lines in the WTSA (Westbound Transpacific Stabilization Agreement) recommending further rate increases for select refrigerated and dry commodities in the US to Asia trade route.
These continuous freight rate hikes are in response to high fuel prices that have been plaguing the operation of shipping lines. Bunker fuel comprise the largest expense of shipping operations and 2012 bunker fuel prices are 13% higher than in 2011.
Shipping companies have already resorted to slowing down ship speeds to minimize fuel consumption (known as slow steaming), but this fuel conservation strategy is producing harmful effects to their ship’s engines. They have also been sailing on different voyage routes to further conserve fuel.
Freight rate hikes may be welcome news to shipping companies, but is distressing to logistics companies and especially to consumers, who end up shouldering the expenses through high-priced consumer goods. Due to such high bunker fuel and freight rate costs, accurate voyage estimation software need to be utilized by shipping agencies to maximize profits on international shipping transactions.
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