Ocean Freight Will Rise in April Due to Tight Transportation Capacity

Apr 04,2024
Industry News
Due to the current tight situation in the shipping market, shipping costs are expected to increase by approximately US$1,000 to US$2,000 starting from April 1, 2024

In the global logistics market, fluctuations in ocean freight costs are an important concern for businesses that rely on ocean freight. Although according to statistics, the supply of ships this year seems to exceed demand, many major shipping companies have still announced that they will increase freight rates as cargo flows are expected to increase in April. At present, it is known that at least eight large shipping companies will start to impose comprehensive rate surcharges on April 1.

Ocean Freight Will Rise in April

Shipping costs expected to rise

Based on current market trends and official price increase notifications from multiple shipping companies, ocean shipping costs are expected to increase by approximately US$1,000 to US$2,000 starting from April 1, 2024.

Space shortage phenomenon

In fact, the current market has deeply felt the tension in transportation capacity. Taking the Matson EXX line as an example, there has been a serious shortage of shipping space recently, which is what the industry calls "liquidation". According to reliable information, small-scale goods were dumped from the container last week, and shipping space is expected to be even tighter this week, which will undoubtedly increase the transportation pressure and costs for sellers.

Shipping company price increase notice

Maersk announced that it will impose a peak season surcharge on dry containers from the Far East to the east coast of South America from March 15 to March 31, 2024, with clear charging standards.

CMA CGM will adjust transportation rates from Asia to the Mediterranean and North Africa from April 1, 2024, and suspend calling services in Port-au-Prince, Haiti due to the security situation.

Hapag-Lloyd has implemented new GRI rates for transportation from Asia to the west coast of Latin America and other places, and the specific amounts have been announced in detail.

These price increases not only reflect the current tense situation in the shipping market, but also indicate an upward trend in transportation costs in the future. For sellers who rely on ocean freight, this means they need to bear higher logistics costs and may need to adjust their shipping plans to adapt to new market changes.

The background and reasons for the increase in sea freight

Ports of Los Angeles and Long Beach see throughput growth

February data shows that the throughput of the Port of Los Angeles increased by 60% year-on-year, and the Port of Long Beach increased by 24.1%. As the global economy recovers and trade activities increase, freight demand continues to be strong. However, the supply of ships has not fully met this demand, resulting in tight transportation capacity, which in turn has pushed up freight rates.

Impact of the situation in the Red Sea

As the situation in the Red Sea escalated, shipping companies detoured around the Cape of Good Hope, causing delays at South African ports and some ships queuing for more than 22 days.

Rising operating costs

Rising fuel prices, strict environmental regulations, increased labor costs and other factors have jointly pushed up shipping prices.

preventive solution

Taking these factors into consideration, sellers need to be prepared in advance. It is recommended that sellers start stocking up as early as possible and make shipping plans to avoid being passive when shipping costs rise. At the same time, maintaining close communication with logistics partners to understand market dynamics and transportation arrangements is also the key to ensuring business continuity and reducing additional costs.