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No sign of partnership as shippers vs carriers
By Greg Knowler, Editor
Everything points to a titanic struggle between container lines and shippers at the freight rate contract negotiations on the transpacific in the next couple of months.
On one side will be the carriers fighting for their survival (or so they claim), and on the other will be their customers, furious at the additional charges and unnecessary space constraints on the trade lane.
The staggering losses lines reported last year stemmed largely from panicked carriers locking shippers in at low rates after trade levels hit the floor.
This year the carriers will be sure to drop anchors at any attempt to reduce rates to last year's levels, even if trade falls off sharply after Chinese New Year. And the lines have a
weapon this time - 10 percent of their global fleet is laid up, they are slow steaming all over the place and sharing slots with other carriers.
That makes it possible to claim a lack of capacity, which in turn enables them to hike rates.
But matching supply with demand has never been a strong point of the lines. Take the surge in exports in the run-up to Chinese New Year. It is entirely predictable because it happens every year, yet we have heard countless complaints from our readers, most of whom are shippers, of cargo being rolled, despite being booked well ahead of sailing.
Are the lines deliberately ignoring peak period demands and creating havoc with shipper schedules just to drive up rates?
But there's more: The carriers were not content with just creating this artificial shortage of space. They also decided to introduce an "emergency revenue charge" of US$400 per FEU on the Asia-US route from January 15.
The Transpacific Stabilisation Agreement that represents carriers on the trade even admitted that the charge was to improve revenue in the run-up to the negotiations. So any time revenue is a bit short, the lines can just slap on an "emergency charge" to boost their coffers.
I am sorry, but that is just insane.
According to Drewry Shipping Consultants, the charge helped push up the spot rate for shipping an FEU from Hong Kong to Los Angeles by 20.5 percent in the last week of January.
The lunatics certainly are in charge of the asylum at the moment. Even as the lines try desperately to elicit sympathy from shippers of their dire predicament, they cannot help themselves throwing in another dodgy surcharge.
It appears years of operating as a cartel have completely removed the ability of carriers to regard shippers as clients. This disconnect between transpacific container shipping lines and their customers is so great that it is sometimes hard to believe they are partners in the same supply chain.
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