- 80% of shippers feel they have to pay premiums of $400 to $500 per container on the deepsea trades to avoid rollover.
- Load factors had reached as high as 95% on headhaul services, up from 80% in “normal” times.
- Spot rates for a 40ft container on the transpacific eastbound routes expected to go to $2,800 and Asia-Europe spot rates to be about $2,200-$2,300.
- Shippers end up paying $2,200 per container though they booked at $1,500 per container.
Shippers are forced to pay no-roll premiums as shipping lines use rollovers to bump up freight rates, says an article published in The LoadStar.
High premium
According to Cas Pouderoyen, head of ocean freight at Agility, around 80% of shippers feel they have to pay premiums of $400 to $500 per container on the deepsea trades. “Otherwise, odds are, you’re going to be rolled,” he said.
That’s happening with cargo going Europe-to-Far East, Far East-to-Europe and transpacific-eastbound. The latter is the worst, in terms of guaranteed space.
Pay to avoid delays
Mr Pouderoyen described rollovers as the carriers’ way of imposing a rate increase “by another name.” He warned that shippers that won’t pay face lengthy delays.
Their cargo could be sitting for four or five weeks, because if you get rolled one week, there’s no guarantee you make it onboard the following week.
So according to him, if a product needs to get to the destination by a certain time, it is better to pay the premium.
Carriers getting clever
Increased rates and rollovers have been made possible by carriers’ capacity discipline in turn, a result of the widespread industry consolidation in recent years.
Mr Pouderoyen described the carriers as “finally getting clever” and realising they can only control capacity, and not demand.
As a result, he said, load factors had reached as high as 95% on headhaul services, up from 80% in “normal” times.
Mr Pouderoyen said:
With sky-high load factors, the carriers are in an enviable position to dictate the terms of carriage.
Spot rates expected to go double
“Shipping rates are way up. Next week, spot rates for a 40ft container on the transpacific eastbound routes are expected to go to $2,800, about double what they were a year ago. Asia-Europe spot rates will be about $2,200-$2,300.”
Price to win business
Mr Pouderoyen also warned there were many forwarders quoting unrealistic prices to win business in an increasingly competitive market only to jack up rates later on.
The shippers, thinking that they got a special rate with a guaranteed space, will end up paying $2,200 per container though they booked at $1,500 per container.
Fresh demands
Mr Pouderoyen added agility was experiencing some green shoots of demand as major economies re-open after lockdown and peak season gets under way.
Demands are seen to improve as major consumer countries start opening up again, starting with Europe.
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Source: The LoadStar
