Shippers envision another year of record rates
Shippers (cargo owners) around the world are engaged in tough negotiations with container shipping lines for annual contracts starting Jan. 1, amid indications that most tariff agreements will continue to be at ” record levels “.
While carriers are reaping the rewards of an excellent year with record profits; shippers seek “to bring predictability and stability to their supply chain”.
The first round of ocean freight tenders reveals some interesting information, according to Oslo-based Xeneta AS, one of the leading platforms for sea and air freight rate benchmarking and market analysis.
Value for money
Xeneta data for four deals shows offers landing in three main price brackets.
Lower deals are offered by some carriers, but require shippers to agree to either extended contract periods or broader logistics agreements
The mid range corresponds to the offers of more traditional carriers, while the highest prices come from the freight forwarders, although they also offer some shippers competitive rates compared to the offers of the traditional carriers.
âFor shippers, the question has to be; Are there real alternatives to accepting these record rates? Or are they at the mercy of carriers who take advantage of their current position of power? Says Peter Sand, chief analyst at Xeneta.
âHowever, with these much higher prices, shippers deserve much better service. This includes containers arriving within a reasonable time, at the desired port and at the agreed price, âhe explained.
On trade from China to Northern Europe, the average bid stands at $ 11,900 per Forty Foot Equivalent Unit (FEU), a significant increase for all shippers from long-term contracts signed in 2021 range of offers depending on the person making the offer and the terms.
Trade between China and the United States is at a much earlier stage of the tendering process, with the market not yet settled. However, early indications show average bids of $ 5,700 per FIRE.
âWhile the absolute level of future long-term rates may leave you speechless, the fact that they are tracking the spot market should come as no surprise as long and short-term markets are correlated. While it may be tempting to go for the lowest price offered, the differences in what is offered mean that the implications for the broader supply chain must be considered – without a ‘one size fits all’ solution. , says Peter.
The importance of stability and predictability in global supply chains grabbed the headlines this year. Securing them will be the top priority for many shippers as they enter difficult negotiations, according to Xeneta.
“However, it could be risky for shippers to enter into a long-term tariff agreement without being fully informed and without having data to draw these conclusions,” added Peter.