Sea freight surcharge continues to be reduced by many shipping lines

The global economic situation continues to show difficulties in production and trade in the last month of 2022 and on the eve of the new year 2023. Inflation caused governments to tighten currencies, production and investment slowed down. On the other hand, orders from European and American markets decreased in the context of weak purchasing power and high inventories, leading to a decline in demand for transporting goods from Asia to these major consuming markets.

Reduced transportation demand has a direct impact on freight rates and surcharges. As of mid-December, many shipping lines have reduced surcharges, even including them in the freight rate to quote prices instead of reporting separately between freight rates and surcharges as before.

For example, according to the latest quotation of Yang Ming shipping company on price adjustment and surcharge for international container shipping by sea at Vietnamese seaports, in addition to the year-end sea freight rate, there is a slight decrease. decrease, shipping line surcharges also tend to decrease, especially fuel surcharge.

+ Petrol surcharge in South Asia will be reduced from 8 million VND/40-foot container in October to 6.5 million/40-foot container from November 2022.

+ Fuel surcharge in the Red Sea area from 12.09 million VND/container of 40 feeds to 9.8 million VND/container.

+ Surcharge for a 40-feed container in the Red Sea area was VND 17.4 million in October, now reduced to VND 14.2 million.

At times when freight rates are high, shipping lines often separate surcharges from rates, which helps create a "feeling" for shippers that the surcharges are due to "forced market circumstances". Normally, for transport routes from Vietnam to China, the THC surcharge (handling surcharge) is about $120/cont 20 feet and $180/cont 40 feet. Meanwhile, the fuel surcharge also fluctuates around 150-300 USD/cont 20 feet. But now many shipping lines have included surcharges and freight rates from Vietnam to some Chinese ports. Accordingly, the announced freight rate fluctuates about more than 100 USD/cont 20 feet.

Surcharges due to fuel price fluctuations are rapidly decreasing as shipping lines move to save on fuel costs:

+ Zim's fuel price volatility surcharge from the US West Coast to Asia will be 32% lower in Q1/2023 compared to Q4/2022, reducing to USD720 per 40-foot container.

+ Evergreen's West Coast America - Asia surcharge peaked in the third quarter of 2022 but could decrease by 41% in the near future.

+ In the US-Asia East Coast route, Cosco's fuel price fluctuation surcharge will be reduced by 21% from Q3/2022 to Q1/2023, to US$1,425/FEU. CMA CGM's surcharge is also forecast to decrease by 21% from Q4 2022 to Q1 2023 to $1,098/FEU.

Source: VITIC