Although some traders had previously locked in lower freight
rates through long-term shipping contracts in 2016, several
sources told IM in December that container
shipping companies were giving loading priority to more
valuable cargo unless mineral shippers were willing to pay a
higher freight rate.
"The shipping container [companies] do all the cherry
picking, the higher value will be shipped, [lower value]
containers will be postponed. I have this problem with a
bauxite container," a Europe-based trader told
IM at the end of December.
The bauxite cargo in question was initially due for delivery
from China to Europe in early August, but shipping took place
in mid-September only after the Europe-based trader had agreed
to pay a higher freight rate to secure cargo space, the source
"Finally we had to ship at $1,000/container rather than
$700/container," he added.
A second Europe-based trader has been experiencing the same
issue since October.
"Many cargoes which were booked by intermediaries are now
stuck, not moving because the container companies, while they
accepted the lower rates some time ago, are just placing low
paying cargo at the back of the queue and telling the cargo
owners/shippers, ' sorry no empty containers’ or
'no shipping space available’," the second trader
A number of fused alumina and bauxite shippers also told
IM that they are struggling to find shipping
space for their cargoes from China to Europe.
A source from one Europe-based container shipping company
confirmed that there is a strategy within the industry to try
to increase profitability by raising freight rates, following
years of losses and squeezed margins.
"The increase is 20-40%, depending on the location, I think
everybody is trying to recover from Hanjin, you see the
remaining players are trying to do something," the shipping
South Korea’s Hanjin Shipping, the
world’s seventh largest container carrier,
declared bankruptcy in August, disrupting trade routes and
leading to speculation that freight rates would move higher.
The sharpest freight rate increase reported to
IM is from China to Europe, but the impact of
the increase has also spilled over to other shipping routes
such as from Africa to Western Europe, the shipping company
As China is one of the biggest industrial minerals suppliers
in the world, the higher freight rate is set to raise the
buying cost of minerals, traders said.
The freight rate for a 20-tonne container stood at
between $1,000-$1,100, on 23 December, according to the
The freight rate increase has mainly affected container
shipping but the impact on bulk shipment is less clear, the
European shipping firm told IM.
With China closed for business during the Spring festival
between 28 January and 4 February 2017, many market
participants rushed to secure cargo space ahead of the Chinese
Meanwhile, the situation of congestion at South African ports
for local suppliers.
Securing both bulk vessel space and containers became harder
throughout Q4, as availability of cargo was limited and fewer
ships were in operation, sources told IM.
To ensure deliveries are shipped on time going forward, at
the end of 2016, local companies were booking space in
advance with ship liners for 2017 – a practice that
has never before been necessary cargo availability was not an
"We are already booking ship space for the end of January
and for February," IM was told by a local
industrial minerals supplier on 22 December.
Severe transport disruption in Tianjin to hit mineral
In response to harmful smog levels in Tianjin, China, the
local government imposed mass restrictions on motor vehicles at
the end of December. The transport disruption was expected to
hit industrial minerals deliveries as Tianjin is one of the
main export routes from China.
Transportation was severely disrupted in Tianjin, one of
China’s biggest port cities, amid worsening smog
levels as the local government imposed stringent checks on
Tianjin’s local government announced on 15
December that the smog level in the city would trigger a red
alert – the most critical level –
on 18-19 December. In response to the severe pollution,
the authorities rolled out a series of contingency plans.
Tianjin’s port, Xingang, is the biggest port in
northern China and is the main export point for most of the
industrial minerals from China. The disruption was expected
to delay minerals deliveries globally.
As part of the measures, government officials imposed strict
checks on all motor vehicle exhaust fumes, and those that did
not meet environmental standards will not were not allowed on
A number of motor vehicles and medium-to-large size diesel
trucks were restricted, with the exception of emergency
situations. To prevent pollution levels from worsening,
construction and any related activities were halted,
including the transportation of gravel, dregs and
Schools were also shut and people were urged to remain
indoors by the Tianjin government.
According to a statement by the Tianjin Environmental
Protection Bureau released on 21 December, the government
also conducted anti-pollution inspections on 473 companies,
including cement producers. Many bauxite and brown fused
alumina processing facilities are also based in Tianjin.
Tianjin Port Group Co. Ltd, the operator of Xingang port,
announced on 19 December that it had complied with the
city’s contingency plan and implemented measures
to ensure the smooth operation of the port. According to
Tianjin port, about 130 vessels passed through the port between
16-18 December, with cargo throughput at 1.99m tonnes.
This wave of intensifying anti-pollution checks comes after
the Ministry of Environmental Protection (MEP) urged local
authorities in six provinces – Beijing, Tianjin,
Hebei, Shanxi, Shandong and Henan – on 30 November
to take swift action against harmful smog levels.