Tag Archives: container rates

Softening spot rates could mean ‘days are numbered’ for ad-hoc carriers

Spot rates for container shipments might be coming down from the stratosphere. There are a few indications, such as Xeneta’s XSI short-term index from Asia to North Europe.

If short-term rates really are coming down, what is going to happen to many new ocean shipping entrants in the trade from Asia? These new firms offer regular shipments with no blanking, faster transits, calling at less congested ports for faster unloads, status monitoring, and good communication.

Most of these firms have a limited number of smaller ships. The conjecture here is that they cannot survive if rates drop back to reasonable levels.

I think this position underestimates the value of on-time and reliable service. Many shippers will pay to get out of the bottleneck system the alliances are running, with large ships calling at large congested ports, and frequent delays of service, including simply canceling voyages if they aren’t full enough. You can’t have a viable business if you’re only on-time 30%-40% of the time. Lots of customers will choose another way.

We have already seen large container shippers such as Amazon, IKEA, and Costco choose dedicated service with captive vessels for some of their cargo. If it works well, that could expand, leaving the major alliances with less cargo to carry.

Interestingly, the large ocean carriers have a new name for what they are doing. Canceling a voyage is not to be called ‘blanking’, but rather ‘sliding’. Whatever you call it, it’s a disruption in service supposedly guaranteed.

By Mike Wackett 11/02/2022

Softening spot rates could mean ‘days are numbered’ for ad-hoc carriers – The Loadstar

Vessel charters get longer and more costly as carriers continue to hunt tonnage

Here are more examples of Non-Operating Owners chartering ships. And they are increasing in price. These carriers are outside the liner alliances, and allow the ships to move as they choose instead of following liner schedules. They can choose routes which avoid the major choke points in container handling we see now.

It’s another way to escape or try to escape the port congestion we see at major ports.

But there are increasingly signs that the congestion is spreading from the major ports such as LA and Long Beach to smaller ones such as Tacoma and even some East Coast US ports.

How do carriers escape the congestion then? At least with their own ships, not assigned to rotations, they can pick and choose. that flexibility may aid in winning contracts to shop goods.

By Mike Wackett 17/11/2021

Vessel charters get longer and more costly as carriers continue to hunt tonnage – The Loadstar