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Carriers are omitting ports in the Middle East and Mediterranean amid continued Suez diversions . Shutterstock . com reductions of Panama Canal transits slots due to low-water levels or something not even on logistics managers ’ radar .
The spike in spot rates , a barometer of how ship capacity matches with demand , was already losing momentum in late January , another sign of the market adjusting . But while spot rates may be past their most recent peak , the likely continuation of vessel diversions away from the Suez Canal in the short term should keep pricing well above late-2023 levels , Andrew Lee , an equity analyst at investment bank Jefferies , wrote in a Jan . 28 advisory .
“ Container charter rates increased for the sixth consecutive week , with the 7 % week-to-week increase , the largest sequential increase this year ,” Lee said . “ We believe this reflects the container lines ’ optimistic outlook and nearterm capacity tightness .”
The high degree of uncertainty has spurred carriers to suspend Asia – Europe contract offers “ until the Red Sea situation settles ,” a spokesperson for Hapag-Lloyd told the Journal of Commerce .
Forwarders have indicated that the suspension of long-term rate offers extends beyond Hapag-Lloyd to other carriers , but those contacted by the Journal of Commerce have yet to comment . According to Michael Amri , head of ocean freight at Hellmann Worldwide Logistics , it doesn ’ t make much sense for carriers to offer long-term deals with so much uncertainty in the market right now .
“ Some shippers will have to launch tenders now because their contracts are expiring , but I would advise them to do a quarterly contract and see how the market is after Chinese New Year ,” Amri said .
On the Asia – North America trade , ocean carriers are making a last-minute push to implement general rate increases ( GRIs ) before Lunar New Year . Sources — including importers , carriers , non-vessel-operating common carriers ( NVOs ) and industry analysts — told the Journal of Commerce the trade lane is seeing proposed
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“ It ’ s going be wise for shippers to wait . I don ’ t think that early biters are going to get a better deal this year .”
GRIs ranging from $ 600 to $ 1,000 per FEU meant to take effect on Feb . 1 or Feb . 15 . Most of those sources , however , expect rates to decline quickly when factories in Asia close during the two-week celebrations .
The actual rate increases that importers are paying vary widely based on carriers ’ contracts with their individual customers . Carriers generally are not charging customers peak season surcharges when their contracts specifically prohibit such fees . However , those customers may be hit with Panama or Suez Canal surcharges on all-water services from Asia to the East Coast , said Rachel Shames , vice president of pricing and procurement at forwarder CVI International .
Conversations among US importers suggest there ’ s little rush to accelerate the traditional timeline for signing annual service contracts , which generally begin May 1 .
“ I think it ’ s going be wise for shippers to wait . I don ’ t think that early biters are going to get a better deal this year , because of the confusion and where market levels are ,” said Shames . “ We ’ re telling our customers that this is definitely not a year to rush .”
Associate Editor Michael Angell and Senior Editors Greg Knowler and Bill Mongelluzzo contributed to this report .
email : mark . szakonyi @ spglobal . com
February 12 , 2024 | Journal of Commerce 15