Negative freight rates – the meltdown
How and why we get there
Ocean carriers have been warned not to take advantage of the capacity crunch resulting from the Suez blockage to “price-gouge” their customers.
Following reports that shipping lines are predicting increases in spot rates and new surcharges due to the disruption, James Hookham, secretary general of the Global Shippers’ Forum (GSF), warned shippers “to be wary of this signalling of future prices and of demands for new surcharges”.
He said: “This incident was not our [shippers’] fault and reasons why customers should be expected to pay extra, on top of record shipping rates, for goods delivered late and for reasons ultimately of the industry’s own making, should be challenged.
“The shipping industry is reminded that Suez is a canal in Egypt, not an excuse to price-gouge your customers.” he added.
Meanwhile, carriers are busy recalculating the ETAs for their North Europe-bound vessels affected by the six-day canal blockage in an effort to mitigate port congestion.
The backlog of some 350 vessels waiting to transit the waterway is expected to be cleared by this weekend, however, the arrival of delayed containerships into North Europe could coincide with vessels re-routed via the Cape of Good Hope.
THE Alliance partners diverted four eastbound and two westbound sailings via Africa during the Suez Canal closure, 2M partners Maersk and MSC re-routed six eastbound and seven westbound and the Ocean Alliance re-directed four eastbound and four westbound ships.
Moreover, The Loadstar understands this morning that alliance partners are also considering reducing the service speed of vessels “past the point of no return” in the voyage via the Cape to “allow some breathing space” for the arrival of cargo on delayed ships now en route through the canal.
North Europe’s container hubs have been struggling to cope with the unrelenting flow of imports from Asia for almost a year. Hapag-Lloyd said yesterday the congestion in most European ports was “leading to persistent and extreme delays”.
At Antwerp, the carrier advised, it was implementing a “seven-day cargo opening rule” – which effectively means it would not accept any export containers more than seven days prior to the vessel’s confirmed ETA at the PSA terminals.
Data from the supply chain visibility company, project44, estimates the retail value of goods caught up in the Suez Canal blockage at over $83bn.
“The industry is bracing for the next phase of the crisis – a race to the ports around the world,” it said. “Just because your cargo is moving again doesn’t mean you can breathe easy. Understanding and monitoring port congestion over the next few weeks will inform us how large the shockwaves from this incident are going to be.”
And the impact on the supply chain will be felt more severely when carriers are obliged to blank sailings from Asia next month, a knock-on effect of ships being delayed at the canal.
According to one forwarder source, there are already big gaps opening in carrier export options ex-China from mid-April, with carriers admitting that there is no tonnage available to plug the gaps.
Indeed, a customer advisory from Maersk today warned shippers of a loss of capacity of “20%-30% over multiple weeks”.