Freight prices from Asia are reported to be rising

Freight prices from Asia are reported to be rising

Shippers say apparel buyers from Asia are likely to see shipping costs increase this year, in line with rising demand.

While shipping lines were laid off during the global downturn, trade – mainly out of the Far East towards Europe and the US - is now recovering. However, the re-supply of ships has not kept pace.

“Based on the current trend, buyers are likely to see freight costs increase from Asia,” Rohan Masakorala, the secretary general of the Asian Shippers Council, told just-style.

“We expect demand for ship space to increase from Asia towards Christmas season. But the supply of ship space may not come in so fast. So we are expecting freight costs to increase for buyers from Asia.”

Already this year, freight rates out of Sri Lanka, have increased by as much as 50%, compared to last year.

“From the last quarter of 2009 to the end of the first quarter of 2010, rates have gone up by as much 50% in some sectors,” said Gehan Kuruppu, the chairman of the Sri Lanka Shippers’ Council.

Increasing shipping costs may also hit local apparel exporters - in addition to buyers. This is in spite of western buyers placing export orders on Free On Board (FOB) basis.

Shippers say shipping lines impose additional, non-freight, surcharges on exporters, because many Asian countries like Sri Lanka do not have laws controlling anti-competitive practices by shipping lines.

Therefore, the practice, by shipping lines, of inflicting surcharges on exporters, is expected to continue.

Because buyers pre-contract shipping lines, to keep their delivery deadlines apparel exporters have no choice but to pay extra non-freight surcharges demanded by the shipping line.