International freight forwarding and logistics company, Panalpina Welttransport (U.S. OTC: PLWTF) announced a $52 per twenty-foot equivalent unit (TEU) surcharge for shipments moving through the Strait of Hormuz.
The add-on to the standard rate is in response to increased insurance expense to insure the freight moving through the volatile shipping channel after recent vessel attacks. Since May, the region has seen attacks on a half dozen oil tankers as well as a U.S. drone.
Many large ocean carriers like Cosco, Maersk and CMA CGM have already seen insurance costs increase. Annual war risk surcharges have climbed and breach premiums have been implemented in response to recent attacks on tankers in the region. The increased risk of shipping in these waters has already brought about increases in rates and could lead to higher earnings for the tanker lines as well.
“There is an increased risk of operating in the Gulf region and a sense of insecurity for shipments going through the Strait of Hormuz. Now that shipping lines have added insurance-related surcharges for such shipments, we have to pass these costs on in order to stay competitive and keep up the high-quality service for our customers,” said Peder Winther, Panalpina’s global head of Ocean Freight.
Panalpina said that it will introduce a “flat” surcharge to address the increased costs of shipping through the Strait of Hormuz to simplify billing for its customers. Full container load (FCL) shipments will see the flat $52 surcharge per TEU and less than container loads (LCL) will see a $3 charge per cubic meter. The charges took effect on July 8 for all shipments in the region except those with the U.S. as the point of origin or destination. U.S. shipments will see the surcharge beginning August 1, 2019.
From the press release, “Panalpina’s surcharge currently applies to shipments via the Strait of Hormuz and to shipments with destination or origin port in Bahrain, Iraq, Kuwait, Oman, Qatar, Saudi Arabia (Eastern Province ports Dammam and Jubail), and the UAE.”
Panalpina is the world’s fourth-largest provider of ocean freight services. It partners with shippers and the majority of the largest ocean carriers in the world providing space allocations for freight on container shipping lines on nearly every global shipping lane and route. Panalpina expedited 1.5 million TEUs via ocean in 2018.