East China's trans-Pacific shipping carriers are increasingly confident they can avoid a price war over the Lunar New Year period, as many factories in Asia will be closed for about two weeks from the end of January, but they worry immediate prices may not bounce back as they usually do in spring as carriers planAdd at least 160 million standard cases to the global fleet in 2024-25.As a result, Shipless Carriers (NVO) said some ferry companies have contacted them to renegotiate fixed rates for 2024-25 (also known as registered account contracts), most of which are due to expire on April 30.
This is a strategy by carriers to attract shipless carriers through reopened annual contracts, which, although higher than the agreement they signed last spring, is still below the immediate freight rates currently down from the peak in early summer. “Several carriers have already made this offer to us,” said Kurt McElroy, executive vice president of NVO Kerry Apex. Currently, NVO Designated Account Rates range from approximately $1,600 to approximately $2,000 per FEU, and if NVO agrees to pay an additional $1,000 per FEU, the carrier will lock in the new rate before the April 30 contract expiration date. If imports increase and exceed their fixed rate allocation, this will provide a hedge for the NVO.
When this happened in June, NVO paid for various types of freight (FAK) rates in excess of $6,000 per FEU. McRoy said that the terms and conditions of contracts, such as the Increase in Minimum Quantity Commitment (MQC), are usually negotiable. Jon Monroe, an NVO consultant, said that freight agents can use the opportunity of contract renegotiation to increase MQC and lock in fixed rates for the next six months; in other words, if the designated account rate to the West Coast is $2,000 per FEU and NVO agrees to pay $3,000 and possibly increase MQC, Then the NVO will lock in a favorable fixed rate for the duration of the contract. However, Rachel Shames, vice president of pricing and procurement at NVO CV International, said the opposite could happen. If FAK rates plummet (as they did in January of this year), NVO could save money by simply paying FAK rates. “FAK rates are very likely to continue to fall, and you have to look at what your risk is. No one knows what the final six months of these contracts will look like.” Shames dibêje.
At the same time, the freight agent said retailers preloading 25 spring merchandise could boost U.S. imports from Asia during the typically off-season November and December and prevent an immediate crash in freight rates on transPacific routes east later this year. James Caradonna, executive vice president of shipping agent M&R Spedag Group, said imported goods related to Valentine's Day and spring events usually start shipping in December, but should be two months ahead of time starting in October. This is similar to the pace of year-end holiday merchandise that began arriving at U.S. ports in June this year instead of August. “The entire 12-month cycle is changing a few months in advance,” Caladona toldBusiness Magazine.
Shames says: Carriers are collecting this year starting in June instead of August (traditionally the start of peak shipping season)Peak Season Surcharge (PSS).Carriers were also optimistic about imports from Asia in the fourth quarter.George Goldman, president and chief executive officer of Delta Cruises North America, told Business Journal that“Between now and the end of the year, Eastern's trans-Pacific route still looks healthy, and the reality is that more cargo is in the system than we expected.”
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Shipping prices for transPacific East fluctuate throughout the year. Based on S&P Energy Information (S&P Global)“Business Magazine”sister company) data, after a series of comprehensive rate hikes (GRIs), immediate rates from Asia to the West Coast spiked in early July to $8,133 per FEU, but have now fallen to $4,500 per FEU. On July 5, the East Coast immediate exchange rate spiked to $10,133 per FEU, but has now fallen to $5,600 per FEU, according to Platts.
Airlines this year amid rising freight ratesLaunched or Resumed 10 Flights from Asia to the West Coast。 Ferry companies also in September and OctoberOperates 28 single-aisle replenishment vessels14 ships per port to Los Angeles and Long Beach. As a result, shipless carriers say they have not encountered space constraints on the West Coast.
