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By Mike Wackett (The Loadstar) –
Ocean carriers are determined to keep container spot rates at their highly elevated levels for as long as possible, as they look to lock in annual contract customers with rate increases of 100% or more.
And with no sign of a spot rate decline following the beginning of Chinese New Year last week, shippers that have held off sitting down with their carriers, expecting the normal rate erosion after CNY, are now having to bite the bullet and agree much higher contract rates, rather than taking their chances on the spot market.
Commenting on the dire market situation for shippers, Gordon Downes, CEO of digital contract platform New York Shipping Exchange, said he did not believe rates would retreat after the pandemic, “for a few years”.
Food is piling up in all the wrong places, thanks to carriers hauling empty shipping containers.
Global competition for the ribbed steel containers means that Thailand can’t ship its rice, Canada is stuck with peas and India can’t offload its mountain of sugar. Shipping empty boxes back to China has become so profitable that even some American soybean shippers are having to fight for containers to supply hungry Asian buyers. Strikes in Argentina have also boosted Asian demand for U.S. agriculture products, adding to competition for boxes.
“People aren’t getting their goods where they need them,” said Steve Kranig, director of logistics at IM-EX Global Inc., a freight forwarder that handles cargoes including rice, bananas and dumplings from Asia to the U.S. “One of my customers ships 8 to 10 containers of rice every week from Thailand to Los Angeles. But he can only ship 2 to 3 containers a week right now.”