Cost of shipping doubles in the past 12 months

posted on 22/07/2008: 233 views

The cost of shipping a container from Dubai to key destinations around the world has almost doubled in the past 12 months – sparking fears that rates could reach alarming levels.

Shipping a 20ft container from Jebel Ali to Rotterdam, Europe's largest port, through Inchcape Shipping Services currently costs Dh3,300 while a 40ft unit costs Dh6,200 before port charges. In the same period last year shipping a 20ft container from Dubai to Rotterdam cost Dh1,780 while a 40ft one cost Dh3,122. Inchcape is the UAE agent for Hamburg-based Hapag-Lloyd, one of the five top container shippers.

Meanwhile, shipping a 20ft container from Jebel Ali to Shanghai in China – one of the world's busiest ports by cargo tonnage – cost Dh360 in July 2007 but the charge now is Dh576, excluding other charges.

The increase in container shipping rates reflects rising costs in the regional and global industry resulting from increasing fuel prices, port congestion and shortage of skilled manpower.

Container shipping rates have increased almost every month over the past year on lines to Europe, North America, Asia and Africa. "Fuel prices are certainly continuing to push up rates further and it is the shippers who have to bear the extra costs,” said Mathieu Philipe, General Manager of Barry Rogliano Salles (BRS) shipbrokers in Dubai. "The increasing rates, however, have not dampened demand since shippers offset the extra costs by increasing the prices of their shipments.”

Most container companies and shipping agencies in Dubai said rates have increased by almost 100 per cent over the past year.

Extra charges for the Rotterdam route include a Dh703 Jebel Ali terminal handling fee, a 16.24 per cent currency adjustment factor, bunker adjustment factor (BAF) charges of Dh1,780 for a 20ft container and Dh3,560 for a 40ft container and Dh20 SER charges plus Dh550 if the load exceeds 15 tonnes. Handling fees at various major ports have almost doubled as a result of congestion. Jebel Ali's terminal handling fees for containers have increased from Dh450 at the beginning of last year to the current Dh703.

Maersk Line, the largest container shipping operator, has increased its rates for transporting goods from Dubai to North American ports by more than 85 per cent since last year, said a source at the company.

An official at Dubai Shipping Services said the cost of transporting a 40ft container to Mombasa in Kenya, one of Africa's busiest ports serving a huge mainland market, had gone up from Dh8,080 last year to Dh14,830 inclusive of all port charges.

"Shipping companies have been increasing their rates since last year due to rising fuel prices and we have no alternative but to pass them on to the shippers,” he added.

B Rajagopalan, General Manager of Dubai-based freight forwarding company Swift Group, said: "We need to find better ways of managing the increasing costs without passing all of them to the shippers. We are suggesting a series of solutions to our clients and also offering door-to-door services at subsidised rates.”

Some shippers have resorted to transporting their cargo through consolidated cargo services under the less than container load arrangement provided by some shipping agents.

Another factor that has pushed up shipping rates is the increasing cost of buying and hiring containers. A new 40ft container costs Dh9,500 in Dubai while a 20ft unit costs Dh6,000, compared with Dh7,000 and Dh4,800 respectively a year ago.

An official at Almar Container Investments in Jebel Ali said there was an acute shortage of 20ft containers due to high demand. Despite the increasing charges sea transport remains more attractive to shippers than airfreight as they believe the rates are still manageable. Shipbrokers estimate global containerised trade will grow by about nine per cent this year – a drop from last year's 11 per cent growth. However, growth in the intra-Asia container market, the largest in the world, is expected to be much higher. – Emirates Business 24|7

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