News / Taiwan carriers eschew multi-year contracts in favour of 'customer choice'

09/12/2021

Evergreen and Yang Ming are not following the contractual stance of rival operators, including Maersk and Cosco which are locking-in customers to multi-year contracts

The two Taiwanese carriers believe they should not bind their customers.

Yang Ming president Patrick Tu said: “We have to consider customers’ wishes. They may think freight rates may not remain at the same high levels over the next two to three years. However, if customers are sure rates will remain high in the medium term, we’re open to discussing fixed-rate contracts and the duration.”

And an Evergreen spokesperson told The Loadstar: “If our customers request multi-year contracts, we are glad to negotiate based on such terms, and welcome the discussions.”

Meanwhile, South Korean carrier HMM was non-committal when contacted by The Loadstar. a spokesperson said: “We are thoroughly considering internal and external factors. We will continue to review multiple options, reflecting the ever-changing market conditions and characteristics of the main east-west trades.”

This week, Alphaliner reported that Cosco expected to increase the proportion of its contract business on the main Asia-Europe route above 45% next year. The Chinese state-controlled liner giant will also have more two- and three-year contracts with shippers, and it is understood it will begin negotiating long-term transpacific contracts in March.

Some US retailers, having found it hard to secure shipping slots and seeing freight rates increasing, took the initiative and approached liner operators to sign multi-year shipping contracts. These, which can last up to 10 years, are usually based on one of the rate indices or open-ended, with rates reviewed annually.

Currently, container shipping remains an operator’s market, and the contractual rate for Asia-US west coast shipments is between $5,000 and $6,000 for a 40ft container, while to the east coast, it is around $8,000.

Freight benchmarking firm Xeneta’s statistics show that in February, when the last contract negotiations began, average Asia-US spot rates were $3,456 (USWC) and $4,604 (USEC) for a 40ft container. These figures rose to $7,940 and $9,344 in October as port congestion worsened.