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South Asia faces the heat as container crisis deepens on long-haul routes | Hellenic Shipping News Worldwide
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Containerized scrap supply to Asia tightens as freight from USWC surges
The containerized ferrous scrap market in Asia saw tighter supplies and offers coming from western origins, amid bulging shipping space constrains and surging freight rates, sources said.
“Just slightly more than a month back, freight to Taiwan was only at $10 per feet of container, and now it’s $40 per feet of container for March,” a US supply source said. “Freight is massive.”
Other sources, meanwhile, cited 40 feet container prices in a $1000-1,600/mt range to Asia.
Translating to a per metric ton of cargo cost for comparison, the midpoint $1,300 price tag for March shipments would equate to $48.10/mt, versus only $14.80/mt in early January, assuming an average load of 27 mt per 40 feet container.
No Easy Solution To Global Container Shortage
The current shortage of containers has resulted in high freight rates for exporters and disrupted many Malaysian businesses that trade globally.
This, in turn, has led to calls from the Malaysian National Shippers’ Council (MNSC) for the government to intervene and provide some sort of fiscal relief to exporters in the form of tax incentives and the removal of the cap on total logistics costs for a Market Development Grant. (The grant, capped at 30% of logistics costs, is given by the government to encourage companies to expand their market.)
The Federation of Malaysian Manufacturers (FMM) is also urging the government and the port authorities to leverage their relationships with shipping lines to get them to provide more services and capacity to Malaysian ports.
Service commitments, not prices, to take center stage in 2021 container term talks: sources
After the uncertainty that dominated the container markets through most of 2020, service commitments, rather than prices, are expected to take the center stage in the next year’s term contract negotiations, according to sources.
“Going forward, even if a contract costs $100 per TEU [20 foot equivalent unit] extra, shippers won’t mind as long as it gives them a guarantee on price and space, a source based in Singapore said.
Some companies that pay a premium on term contract rates have different perks such as their own block storage on vessels, their container storage at the port, according to Stephanie K Loomis, Vice President FCL Product, US and Canada, Vanguard Logistics Services. Their containers don’t get mixed in with others. These kinds of services is what people are going to talk about now, she said.
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