MSC fired its first shot of December, with 40 foot containers skyrocketing by 50%, leading shipping companies or collectives to follow suit!
At a critical moment when cross-border travelers are preparing for the year-end peak season, Mediterranean Shipping (MSC), the world's largest shipping company by capacity, suddenly dropped a bombshell - starting from December 1st, prices for routes from the Far East to Europe, the Black Sea, and other destinations have increased across the board, with 40 foot container freight rates soaring to $3100, a 50% increase within two weeks. This' first shot of price increase 'is highly likely to trigger a collective rise in top shipping companies such as Maersk and Dafei, adding pressure to the already tight year-end logistics market.
1、 MSC price increase details breakdown: these costs need to be paid extra!
The "Unified Fare (FAK)" implemented by MSC this time covers core routes from the Far East (including China, Japan, South Korea, Southeast Asia) to Northern Europe, the Mediterranean, the Black Sea, etc. All prices are denominated in US dollars and include multiple mandatory surcharges:
Basic freight rates have surged: 40 foot containers at Nordic ports have jumped from around $2000 to $3100, while Mediterranean routes have seen a significant increase;
Surcharge overlay: The global fuel surcharge (GFS) is $79 per TEU, the emission control zone surcharge (ECA) is up to $52 per TEU, the updated carbon limit surcharge (CLS) is $20 per TEU, and the carbon review surcharge (CRS) is up to $85 per TEU;
2、 Behind the wave of price hikes: Three major drivers driving up freight rates
The seemingly sudden price increase is actually the inevitable result of multiple factors:
1. The Red Sea crisis continues to escalate, resulting in a 20% reduction in transportation capacity
To avoid Houthi armed attacks, global shipping companies still commonly detour around the Cape of Good Hope in Africa, resulting in a 30% increase in the Asia Europe route, a surge in fuel consumption, and millions of dollars in single ship transportation costs. Maersk has previously warned that container shipping capacity from Asia to Europe will decrease by 20%, and the supply-demand imbalance will directly push up freight rates.
2. The implementation of EU carbon tariffs and the transfer of compliance costs to shippers
Starting from December, the coverage of the EU Carbon Tariff (CBAM) will be expanded, and shipping companies will need to pay high fees for carbon emissions. The newly added carbon related surcharge by MSC is a direct reflection of this. Industry estimates suggest that carbon costs alone will drive up Asia Europe freight rates by $100-150 per TEU.
3. The peak season at the end of the year is accompanied by a wave of line cancellations, making it difficult to find a single container of cargo space
Black Friday and Christmas stocking have entered a sprint period, with a surge in import demand from Europe and America. Shipping companies continue to reduce routes in order to control costs. In November, the cancellation rate of Asia Europe routes has reached 15%, and the tight availability and price increases during peak seasons have formed a "vicious cycle". Historical data shows that top shipping companies often "respond with a hundred calls", with a collective probability of over 90% to follow suit.
Exception clause: Dangerous goods and high-value goods are not eligible for this rate and require separate negotiation. The cost may increase by 10% -20%.
It is worth noting that this price increase "until further notice" means that there is little room for a decline in freight rates before the end of the year, and shippers need to lock in costs in advance.