News / Red Sea shipping risks: 'forwarders will also take advantage and raise rates'

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Some forwarders have admitted that the Suez Canal situation could offer them some relief from the financial stresses of a soft market.

With shipping lines planning GRIs and rate hikes, one forwarder told The Loadstar “forwarders will also take advantage of this”.

The source said forwarders would also increase rates if carriers did not honour their contracts, and would use the situation to revisit all low-margin contracts – even if carriers don’t.

Shippers are being told that, with carriers declaring force majeure and increasing rates, forwarders would follow suit, forcing customers to accept rising FAK rates – while they continue to book on lower contract rates.

“The intention is to use this situation to increase profits and charge higher rates to customers,” added the source.

However, another forwarder said carriers were no longer adhering to contracts.

“The challenge will be whether carriers honour contracts. We’ve signed ours for next year, and carriers are already saying we won’t get space on the ships.

“Some have said it’s too early to tell, but others have already added a surcharge, on top of contracts and FAK rates.”

ONE said this morning it was applying an emergency peak season surcharge (PSS) for all container types on Asia-Europe, from 1 January, of $500 per teu.

One forwarder said: “Carriers are anticipating it will be ‘Ever Given times 100′.

“They partially see it as an opportunity. I think spot rates could go to $5,000, very quickly.”

He added: “This has given carriers a bit of a catalyst to put rates up – there was nothing in the underlying market that was helping.

“But the combination of the timing of this, and Chinese New Year, plus carriers being very quick to apply PSSs – it’s the silver bullet they were looking for. They are trying to avoid three-figure rates.”

A third forwarder said: “Goodness knows what’s going to happen. And how it will play out. If it has legs and will run for weeks, it will have a major impact. We will do whatever the outcome from carriers.

“The oil and gas industry is also massively affected, so what will the consequences be from that?”

He added that this could also impact transatlantic rates, “if, on those long routes, vessels aren’t moving through the Med and Europe and can’t pick up containers on the way”.

The second forwarder added: “I don’t see this blowing over. Carriers are uncertain how long this will go on. How do you stop it? The Houthis are land-based, so a naval escort won’t help, and there is nobody visible to stop it.”

The source said carriers would look to safety first, and then insurance and whether it would be void if they sail in risky waters.

“At least [going via the Cape] is an alternative. There may be an issue with fuel, but they’ll save millions on not going through the Suez Canal.”