Rising freight rates over the past few months amid reduced
vessel availability have delayed minerals shipments and many
are expecting the logistical disruptions to continue.
Container shipping costs from China have been increasing
almost on a monthly basis since
the end of last year, with some shippers facing difficulty
securing vessel space for delivery, a number of traders and
consumers told IM.
As China is one of the largest industrial minerals suppliers
in the world, the higher freight rate has contributed to an
increase in cost across a number of minerals, including
fluorspar, calcined bauxite, brown fused alumina and
According to one fluorspar buyer in India, the shipping cost
from Southern China to India’s Nhava Sheva for a
20-feet container (fcl), which has a maximum weight-load of
about 27 tonnes, has more than doubled to $600/fcl in May,
compared to $250-300/fcl in April.
While rates from China to Europe were last quoted at
$1,150-1,200/fcl for delivery in May, up 20-30% from the
previous month, a Europe-based minerals distributor said.
Rising freight rate was mainly due to "a combination of a
shortage of containers and really rapid Chinese import growth,"
said analyst James Frew from London-based shipping
consultant Maritime Strategies International Ltd (MSI).
The uptrend for the past five months followed depressed
freight rates over the past few years as vessel supply
outstripped weak shipping demand. But the bankruptcy of South
Korea’s Hanjin Shipping, the world's
seventh-largest container carrier, in August 2016 removed a
large numbers of vessels from service, disrupting trade routes
and contributing to higher freight rates.
Although Frew expects the rapid price increase to unwind
quickly, in general, MSI expects freight rates to trend up in
the medium term.
Lower freight rate subject to
Some market participants have secured lower freight rates at
$900-950/fcl from China to Europe for 2017 by agreeing to
long-term contracts with big freight forwarding companies.
However, container space at these lower rates is subject to
availability as some shipping companies prioritize delivery of
higher-value cargo over cheaper minerals, the Europe-based
distributor and two consumers said.
"These lower contract rates are subject to space and
container availability - this is why you hear containers are
cancelled or not available, because the small Chinese and
foreign traders book with agents who re-sell this space," the
"It’s the same like bucket travel shops
overselling seats on flights," he added.
One ceramic producer agreed: "Containers are difficult to
find...contracts are not honoured, it's a very common
Some buyers are reporting longer delivery times due to
shipping vessels adding stops en-route to pick up cargoes
booked at a higher rate.
As a result, the average lead time from Asia to the US has
extended to between six and eight weeks, instead of the usual
four to six weeks, one US-based fluorspar consumer told
"They are trying to get the higher rate, they are putting
through different routes to get more lucrative cargoes," the
"The shipping company is not accountable to deliver on time,
there is no financial penalty…. It’s very
frustrating, we are the ones who bear the burden," he
IM attempted to contact some shipping
companies for comment but none were available for comment by
the time of publication.