News / Shipping contract deals may be swinging in favour of the shipper this time

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Shippers going into ocean freight contract talks should heed the areas of contention in last year’s negotiations, as the pendulum will likely swing in their favour this time.  

Matthew Gore, partner at law firm HFW, told The Loadstar some of the main issues he had noted from the contract year 25/26 negotiations. 

The first, and one often up for debate among shippers and carriers, is surcharges. Mr Gore said HFW had seen “pushback” from carriers for any clear notification period for the imposition of new surcharges and that they preferred opaque wording, such as ‘reasonably in advance’.  

He added that carriers had also been hesitant on wording which ensured the parties negotiate and mutually agree a position on any new surcharge before implementation. 

“Carriers have been preferring flexibility and imposition in their sole discretion in cases where surcharges are needed, while shippers are favouring clearly defined processes and cooperation in the interest of operational certainty,” Mr Gore explained.  

“I’d imagine the balance should tip back in shippers’ favours in negotiations for 26/27,” he predicted. 

Another way in which carriers are seeking flexibility is through only guaranteeing to load any rolled-over containers on the “next available vessel”, or one of the next two sailing after the original booked sailing. Shippers, however, prefer a guarantee that any shipment rolled over should be put on the next vessel to arrive at the port within a set number of days.  

“How well carriers actively manage capacity will tell if this is likely to be an important issue for 26/27,” said Mr Gore.  

Next, carriers have previously tried to negotiate an extension of time to submit invoices, such as from 30 days to 60 or, as he noted, in some extreme cases, 360 days. This is a clause “strongly rejected by shippers”, and Mr Gore urged that if carriers were competing “more fiercely” for volumes, shippers may seek longer payment terms in 26/27.  

Finally, Mr Gore said, he had seen much negotiation over provisions relating to nominated volumes. While carriers seek to review the tendered volume compared to the nominated volume, and reduce allocations accordingly, shippers seek deviation allowance due to seasonality or market conditions. 

“For 26/27, I expect carriers will be seeking to get whatever volume they can to maintain utilisation levels… it’s likely they may be more accommodating to get shippers signed up,” he noted.  

Mr Gore also wondered whether shippers should spread their volume allocations between multiple carriers or alliances, and advised on the pros and cons of both, depending on the personal requirements.  

“Using one main carrier gives leverage, loyalty, partnership approach, going the extra mile, and so on; versus spreading the volume more evenly across multiple carriers to spread risk and increase supply chain resilience.”