- Spot rates soar as shipping resumes, but carriers are warned not to take advantage.
- The FMC has been monitoring the blanked sailings on the route and discussing with ocean carriers the levels of service and resumption of normal trade.
- US retailers are beginning to run low on imported goods.
- Shanghai Containerized Freight Index soared 18.3% last week to the US west coast, to $1,610 per 40ft, and jumped 8.7% for east coast ports to $2,912 per 40ft.
As the supply chain begins to ease in China, Transpacific carriers are warned against hiking freight rates unfairly, writes Mike Wackett for an article published in The LoadStar.
Warning for carriers
Carl W Bentzel, the newest member of the Federal Maritime Commission (FMC), warned transpacific carriers against hiking freight rates unfairly, as the supply chain begins to free-up in China.
Mr Bentzel expressed his happiness about shipping lines indicating cargo availability for pickup and that trucking and port operations have substantially resumed in China.
Impact on US manufacturers
The FMC has been monitoring the levels of blanked sailings on the route and discussing with ocean carriers the levels of service and the potential resumption of normal trade.
The federal agency responsible for regulating ocean transport in the US said reports indicated US retailers were beginning to run low on imported goods.
This has an impact on US manufacturers such as the automobile industry, which sources some component parts from China, and US exporters of agricultural products suffering logistical challenges.
Pre-coronavirus levels resuming
Information provided from shipping lines involved in the transpacific trades indicates that cargo levels and services are resuming to pre-coronavirus levels.
Coronavirus impacts are expected to linger over the next few weeks while vessels are engaged in the cross-Pacific transit and hopefully, normalcy can be achieved in the transport of goods.
“To be clear, there may still be logistical challenges in processing cargo into United States commerce.”
Mr Bentzel said it would be necessary for all stakeholders in the transport industry, from container terminals to trucking and rail services, “to pitch in to secure normalcy”.
But he warned the carriers who might be planning to recover the billions of dollars of lost revenue from the hundreds of cancelled sailings by announcing GRIs for shipments from China to US west and east coast ports.
- Transpacific carriers raised freight rates substantially during the US-China tariff-beating front-loading demand surge in the final quarter of 2018.
- This did not appear to register on the FMC’s regulating radar, or attract any critical comment from the commissioners.
Negative economic impact
Mr Bentzel said he was concerned about the negative economic impacts as a result of delays, as shipments transit the Pacific from China.
“I would hope that the industry resists the temptation to take actions to price gouge or otherwise unfairly leverage their position.”
The first week of near normal manufacturing and intermodal activities in China since the onset of the coronavirus crisis saw container spot rates for the US, as recorded by the Shanghai Containerized Freight Index (SCFI), soar 18.3% last week to the US west coast, to $1,610 per 40ft, and jump 8.7% for east coast ports to $2,912 per 40ft.
Ability to recover
“Our ability to recover from this economic disruption through the resumption of maritime commerce underscores the criticality and importance of our maritime trade. Hopefully the resumption of this service can allow our nation to recover as rapidly as possible,” said Mr Bentzel.
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Source: The LoadStar