Exporters facing Higher Container Freight Shipping Costs

9th March 2017

Melanie Harper

Over the last month, shipping lines such as Hyundai, Maersk, MSC and United Arab Shipping have been putting up their prices to the tune of $1000 per container and this could have a big impact on exports to the Far East of UK waste packaging materials such as recovered Paper and Plastic.

This is a time of year when container availability can be an issue following the Chinese New Year period and shipping lines often seek price rises as a result. However, availability this year seems to be a much bigger problem after some concentrated efforts within the sector for consolidation. Maersk is one example of consolidation within the sector with its recent acquisition of German line Hamburger Sud, a medium-sized business. This means that Maersk, which is the largest company, now has a market share of about 18%. There was also had the loss of Hanjin Shipping in 2016 which has taken further capacity out of the market.

It is fair to say that pretty much over the last decade we have seen an overcapacity in the market which has pressed pricing down. After the recent consolidation there is now a more balanced supply in the market and this is resulting in the ability for shipping lines to increase their rates. What has come as a surprise is the extent of the price increases and it is not clear yet whether the higher prices will hold.

It appears that the overseas buyers have picked up the additional costs so far but the exporters face squeezed margins and the prices paid for waste materials in the UK could be pegged back too. It is also a likely scenario for PRN prices to increase for the material types reliant on export in containers if the higher costs reduce the export tonnages of materials being recycled overseas.

You can read about the performance of the PRN market so far this year, click here.