Shipper Frustration As Spot Rates Rise Alongside Demand

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  • A surge in demand on the Asia-European trades has led to carriers prioritizing spot cargo over shipments under long-term contracts, resulting in cargo being rolled and frustrations among shippers.
  • Maersk CEO Vincent Clerc noted a restocking trend among European importers, with a 9% growth in volumes into Europe during the first quarter of the year.
  • Shippers are already paying higher rates to avoid rollovers, reflecting the tight market conditions and prompting concerns over the transparency and justification of surcharges.

The Asia-European trades are experiencing a surge in demand, catching carriers and forwarders off guard. Tightening space has increased the likelihood of cargo being rolled, particularly for shipments under long-term contracts.

Impact on Contract Rates

Contract rates are significantly lower than spot rates, prompting carriers to prioritize higher-paying spot cargo. Shippers are facing challenges as their allocations are affected, leading to frustration and concerns about the unpredictability of the current situation.

Maersk’s Observations

Maersk CEO Vincent Clerc noted a restocking trend among European importers, with a 9% growth in volumes into Europe during the first quarter of the year. Consumption remains strong, contributing to the restocking activity.

Rise in Spot Rates

Spot rates on major trade routes, such as Shanghai-Rotterdam and Shanghai-Genoa, have seen notable increases. Shippers are already paying higher rates to avoid rollovers, reflecting the tight market conditions.

Introduction of New FAK Rates

New Freight All Kinds (FAK) rates have been introduced on the Asia-North Europe trades, further impacting shippers. Maersk Line plans to implement a peak season surcharge (PSS) to address capacity constraints and rising demand.

Concerns Over Surcharges

Shippers have expressed concerns over the rapid increase in surcharges, questioning their justification and transparency. Limited communication from carriers adds to the frustration among importers and forwarders.

Impact on Allocations and Contracts

Carriers are adjusting allocations on long-term contract deals, leading to reduced space availability for shippers. Some forwarders have reported significant cuts in allocations, forcing customers to consider alternative pricing options.

Psychological Element to Shippers’ Concerns

Shippers who expected rates to decrease after the Chinese New Year are disappointed by the ongoing market conditions. The lack of space availability and continued schedule disruptions contribute to shippers’ dissatisfaction.

Stability on East-West Trades

Spot rates on major east-west trades have remained relatively stable, with minor fluctuations observed. However, the overall shipping landscape is characterized by uncertainty and challenges for shippers navigating the evolving market conditions.

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Source: The Loadstar