Food suppliers face continued freight rate rises
freight costs and a continued shortage of capacity, according to a
new survey.
Some 52 per cent of shippers blame continued high fuel costs, according to the survey from Logistics Management. But they do not expect further deterioration in the availability of freight services.
Over 80 per cent of shippers reported freight rate increases during the fourth quarter, while only two per cent reported a decline. Only 14 per cent reporting improved availability.
There was a huge squeeze on the supply of shipping containers last year, caused partly by China's insatiable demand for raw materials and higher fuel costs, which caused shipping rates to rise 10 per cent to 25 per cent. According to the US Department of Agriculture, rates from US to Asian ports rose by 12 per cent for refrigerated shipments and 11 per cent for dry shipments for the first nine months of last year.
This trend looks set to continue. Oil prices struck $50 a barrel for the first time since November this week, prompting traders to forecast a return of the record prices seen last autumn. According to the Financial times, the European cold snap has pushed fuel prices higher, with gasoline prices in Asia hitting a record of $60 a barrel.
This reality is reflected in the findings of the survey. However, shippers expect carriers to expand capacity enough in the first quarter of 2005 to keep the availability of freight services constant. Improved availability is expected by 31 per cent of the shippers, while 30 per cent expect the capacity situation to worsen.
But one problem in improving capacity could be terminal congestion. Any delays would cause further capacity restrictions and increase rates for container shipments.
Filip Beckers, the president of the maritime council of the European Shippers' Council, argued at the recent Zelus Port Congestion Solutions conference in Amsterdam that this problem must be addressed quickly. He told delegates that acute container congestion at ports and terminals is now a growing problem throughout the world, with container terminals a particular problem.
The FT quoted Beckers as saying that "congestion will not be a temporary issue, but a structural problem which shippers need to deal with". He went on to say that major European terminals are close to congestion, or will be congested between now and 2007 - only Antwerp was the exception.
