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Shipping rates continue to increase

Three major shipping companies have decided to further raise their prices for containers for routes from the UK to the Middle East, Far East Asia and the US.

Maersk Line CMA CGM and Mediterranean Shipping Company, all three members of the P3 Network Alliance, confirmed that an increase of around $200 (£120) per 40ft container destined for east Asia would be vital in order to cover costs due to a container shortage.

The price increase will affect UK merchants who will be forced to minimise their export prices. Several merchants reported that the current normal price for a 40ft shipping container on the P3 Network was around $1,300 compared with February’s $750 per container.

CMA CGM decided on a general rate increase of $200 per 20-foot container and $300 per 40-foot container for shipments travelling from countries of North Europe (including UK) to routes going to the Far East (including China, Japan, Korea and Bangladesh).

Maersk Line implemented a general rate increase as well on a number of routes from the UK. For shipments going to the Middle East there will be an increase of $200 for 20ft and 40ft containers.

For shipments travelling from the UK to East Asia there will be a price increase of $100 per 20ft container and $200 per 40ft container. Finally for those travelling from the UK to the US there will be a price increase of $500 per 40ft container.

A representative of Maersk Line said: “We have taken the decision to increase rates on these trade routes as the current rates from North Europe to the Middle East, Far East Asia and US do not cover our costs and could lead to a financially unviable situation for Maersk Line.”

The Mediterranean Shipping Company did not comment on price increases.

Meanwhile prices for export materials continue to fall as shipping rates are one of the major factors affecting market prices.

In the paper industry, mixed paper export prices now range from £60-£64 per tonne compared with the beginning of February when prices stood at £65-£70 per tonne.

OCC exports prices fell to £80-£84 per tonne compared with a price range last monthy of £89-£90 per tonne. The new upward rates imposed on 1 April are expected to further affect prices.

The P3 Network

In June 2013, Maersk Line, Mediterranean Shipping Company S.A. and CMA CGM agreed in principle to establish a long-term operational alliance on East–West trades.

The P3 Network wants to operate with a capacity of 2.6 million TEU (20-foot equivalent container units) on three trade lanes: Asia to Europe, Trans-Pacific and Trans-Atlantic. The group’s aim is to “improve and optimise operations and service offerings”.

It has yet to secure full worldwide endorsement from shipping regulators, but the US Federal Maritime Commission has granted its approval. Reports indicate the European Commission will make its decision soon.

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