Rising freight rates over the past few months amid reduced
vessels availabilities have delayed minerals shipments and
many are expecting the logistical disruptions to continue in
the months ahead.
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 vessels’ space
for delivery, a number of traders and consumers told
As China is one of the largest industrial minerals
suppliers, 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
$1150-1200/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 consultancy
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 in turn lifted freight rates.
Although Frew expects the rapid price increase to unwind
quickly, in general, MSI expects the 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, as they have made
long-term contracts with big freight forwarding
However, container space are subjected to availability at
the lower rate as some shipping companies prioritised delivery
for higher-value cargo over cheaper minerals, the distributor
and one US-based fluorspar consumer said.
"These lower contract rates are subjected 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.
Some buyers are reporting longer delivery time 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 six-eight weeks, instead of the usual four-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 one who bear the burden," he