The Far Eastern Freight Conference, which represents shipping lines that export containers to countries including China, has revealed that its members are likely to hike up their overall export prices by $800 a container from October 1.
Rod Riseborough, of the FEFC in London, told letsrecycle.com today that although the exact price rise would depend on each shipping line, the organisation had recommended it be “around the $800 mark” for a 40 foot container.
He said: “It is a doubling. This is the first real increase for almost two years. We have over the last year tried to encourage the shipping lines to put up their prices in small increases but the market has refused to take them. It is now peak season westbound and for some lines it pays them to take containers empty so they can take them back as soon as possible.”
Mr Riseborough explained that for the shipping lines, it would not necessarily matter if they lost some of their Eastbound cargo as the Westbound imports to the UK were much more valuable.
He said: “The lines are prepared to lose some cargo in order to keep their rates up. In some cases they are physically losing money and they might as well take empty ships back and not have them stuck in a year for three weeks waiting to be unloaded.”
Concerns
However, while the shipping lines appeared relaxed about the price increases, recyclers across the UK mirrored concerns expressed by the Environment Agency earlier this month that export price increases could damage the recycling industry (see letsrecycle.com story).
Ron Humphreys, managing director of Abitibi-Consolidated Recycling Europe, said: “The rise in container prices will have a depressing effect on market prices, it is likely prices will erode in the UK in October.”
Paper buyers can only afford a certain price and I suspect they will be unwilling to cover increased transport costs which are bound to be fed back to the supplier.
Martin Green, Paperchain
Such concerns were echoed by Martin Green of paper sector body Paperchain, who said that recovered paper prices may drop.
He said: “Paper buyers can only afford a certain price and I suspect they will be unwilling to cover increased transport costs which are bound to be fed back to the supplier.”
Mr Humphreys explained that, as a result of the imminent shipping price increase, everybody was “scrambling” to get their September shipment out, and said that no-one had yet made commitments for October, as they wait to see how negotiations pan out.
He said “The result is an immediate stagnation in the market and export movement.”
Plastics
In the plastics sector, reprocessors warned that price rises could even lead to material being sent to landfill.
Thomas Gere, purchasing director of plastics recycler AGP, said that he anticipated a rate of $1,500-2,500 to ship containers from the UK to Hong Kong, which would double or treble the rate.
He said “At this level for 70% of plastics grades and 90% of papers grades exports, it is impossible to force the suppliers to bend or lower their price as it will be cheaper to landfill those in the UK.”
He added: “At the moment we are static and waiting for the shipping lines to become realistic in their approach and propose workable tariffs.”
The waste management industry is also concerned about the increase in shipping charges.
Mike Walker, deputy chief executive of the Environmental Services Association, said: “Anything that increases costs is a concern for the industry as the UK needs to process materials and it does not have [enough] domestic facilities.”
Councils
In the local authority sector, meanwhile, council leaders said that it was a matter of “wait and see.”
Lee Marshall, chair of the Local Authority Recycling Advisory Committee, said: “We don't know how it will translate back to local authorities and effect local authority income. It has the potential of altering the economies of exporting material as opposed to sending it to a home market. I think it is a case of wait and see.”
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