The impact of soaring global tanker freight rates on the containerization market

Global oil tanker freight rates soar Daily income of shippers more than 500 times!

Longer distances are reducing ships' available capacity and pushing up freight rates. Shipowners who deliver products from South Korea to Singapore now earn more than $49,000 a day, up from $98 before the conflict.

The turmoil in global fuel markets, affected by the conflict between Russia and Ukraine, has pushed up the cost of shipping refined products such as diesel and gasoline.

Freight rates for fuels such as petrol and diesel -- known in the industry as clean tanker rates -- have more than doubled this year to their highest level since April 2020, according to data from the Baltic Exchange. On a key Asian route, shipowners delivering products from South Korea to Singapore now earn more than $49,000 a day, up from $98 before the conflict.

The same is true elsewhere. Shippers' shipping fuel from the Middle East to Japan on a route called TC-5 earned more than $56,000 a day, up from $61 a day in February, according to data from the Baltic Exchange on Tuesday. Fuel from the US to Brazil on the TC-18 route costs $37,000 a day, up from $3,800 four months ago.

Standard & Poor's Global Commodity Watch analysts Fotios Katsoulas and Krispen Atkinson said an increasing number of long-range class ships have been used to transport refined fuel since the conflict began in late February, according to media reports. Longer distances, they say, are reducing ships' available capacity and pushing up freight rates.

The last time rates for clean tankers were this high was in early 2020, when the global pandemic slashed oil consumption and forced fuel producers to export as much as possible to ease storage tank backlogs.

Anoop Singh, head of tanker research at shipbroker Braemar ACM, told the media that ship demand transporting fuel is expected to grow by 6 percent this year.

In the context of the reconstruction of the global trade path of refined oil products, the average distance contributed by continental Europe and Mediterranean countries will increase significantly, and the distance contributed by the export of refined oil products from the Middle East, the United States, and the Far East will also increase significantly: "Since 2018, the average distance of refined oil products has increased from 2,800 nautical miles to 3,097 nautical miles in 2021, and is expected to rise to more than 3,340 nautical miles in 2022 and 2023 due to the impact of the Russia-Ukraine conflict."

Factors affecting freight forwarder containerization Freight transportation

In international freight transport, one of the most concerning issues is the price of freight transport. The cost is directly related to the cost of transportation. Because many exporters do not understand the price of transportation very much, and often have a lot of extra spending, then today to understand the factors of the price of international freight transportation?

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The transportation prices are different for different containerization

In the general international trade process, the price of transport according to different modes of transport, price is also different. International freight rates are divided into sea freight, air freight and rail freight.

The specific containerization freight rate can also be subdivided. For example, rail freight can be divided into passenger freight and freight. Shipping rates are also divided into tramp rates and liner rates. Tramp rates are also affected by market supply and demand relations at that time, while liner transport costs are relatively fixed. Airfreight can be divided into general goods, designated goods and special goods, and the specific transportation price is also determined according to the weight of transportation, at the same time, even if the volume is small, the weight is also counted by weight, but if the opposite is large, small weight, also according to the specific volume to calculate.

The choice of international logistics, the quality of logistics will affect the seller's store score, but also affect customer satisfaction rate.

Factors affecting the shipping price of containerization

In the process of international transportation, there are many factors affecting the price of transportation, in addition to some fuel and labor costs, there are many important factors. For example, the nature of the containerization, its own value and packaging form, as well as stowage factor and transporter's requirements for transportation, etc. There will be some fixed costs during the use of the ship, such as the ship's maintenance insurance and fuel consumption. There is also the change of supply and demand in the containerization market. In the transport off-season, transport prices are relatively low, in the transport of the peak season, transport prices will be relatively high.

Logistics advantages of the containerization in the destination country and region

In Eastern Europe, DHL has advantages in Romania, Bulgaria, Moldova, Hungary and other places while EMS has advantages in Greece, Russia, Turkey and other places. Western Europe, Northern Europe, southern Europe can use DHL international express, TNT international express, these two kinds of customs clearance capacity. TNT has a clear advantage in the Netherlands and Belgium.

For Canada, the United States and other American countries, FedEx, UPS and DHL are all suitable for their strong customs clearance capacity and fast time.

Applicable to Asia, South Korea, Japan, Thailand and other Southeast Asian countries DHL, FedEx. DHL and FedEx are time-saving, but THE price of DHL is higher. Indonesia also suggests USING DHL because it has a stronger customs clearance capacity.

In Oceania, DHL and UPS aging fast, with high prices; TNT and FedEx have lower prices but relatively few outlets. Particular attention should be paid to the "Made in China" label on the packaging of Australian products.

Middle East express ARAMEX, EMS for Middle East region. Commercial express in Africa is very expensive. In remote areas, IT is suggested to send EMS international express. EMS countries have the strongest customs clearance capacity. The air express containerization can reach many countries and regions that commercial express and postal express cannot reach, so the wide range of containerization transportation is its advantage.

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