Friday Focus: Surcharges
Forwarders and shippers have been warned to expect further rate increases after the container shipping industry was hit by an unexpected container shortage
During the recession, demand for containers plunged so low that even the world’s biggest carriers did not expect demand to return so quickly.
While recent revenue gains in the past few months have contributed to carriers’ balance sheets, Michael Kusuplos, Logistics Consultant at MKGL, pointed out in a letter to IFW: “Increases will only provide a short-term benefit for the carriers as they seek to regain lost revenue in a very fast manner.”
Deepsea carriers worldwide recorded a collective loss of US$15 billion last year.
The 15 members of the Transpacific Stabilisation Agreement (TSA) warned that even though prices had increased, they were not back at 2008 levels.
Along with some other carriers, Maersk has announced it is deferring implementation of a record peak-season surcharge (PSS) to cover the extra costs associated with fighting the container shortage.
From 1 August, the line will charge US$750 per 20ft container, $1,000 per 40ft and $1,200 per 40ft high-cube container on westbound services to Northern Europe.
Westbound to the Mediterranean, the surcharges will be $600 per 20ft, $800 per 40ft and $1,000 per 40ft high-cube.
John Doble, VP Sales and Marketing at Container Shipping Canada, commented on IFW’s LinkedIn page: “Demand has come roaring back this year, more than even the most optimistic economists could predict. With rates reaching close to 2007/2008 levels, carriers can expect to make up most of their 2009 losses.
“Maersk’s loss in 2009 was just over $2 billion. It appears they will make all of that back this year. The container shortage which has surfaced in recent weeks will only work in favour of those increases.
“Lines can call it PSS, equipment reposition surcharge, or (because we can surcharge), the point is: if shippers have few options, they have to pay.
“Maersk, generally, takes the lead in pushing for increases, hoping others will follow. In this case, even if their competitors don’t, shippers have few options”
Shippers and forwarders have spoken out about the increasing number of price hikes and the knock-on effect it has on their customers.
Kusuplos said: “I do feel that they [carriers] are doing a great job in planting the seeds of resentment within their customer base.
“This is the beginning of yet another boom/bust cycle.”
However, in some cases the rate increases are seen as the only option because no carrier would want to go back to operating vessels that are under-utilised.
YM Kim, President and CEO of Hanjin Shipping, said: “More than ever, they [carriers] need the PSS to prepare for service contingencies and to meet schedule and delivery commitments on a sailing-by-sailing basis. And also to cover increased existing operating expenses and the increased cost of capital.”
In an attempt to tackle the container shortage situation, Maersk has begun to bring in laid-up ships. The line has also placed an order for 120,000 containers.
The container shortage is expected to last until autumn this year.
While recent revenue gains in the past few months have contributed to carriers’ balance sheets, Michael Kusuplos, Logistics Consultant at MKGL, pointed out in a letter to IFW: “Increases will only provide a short-term benefit for the carriers as they seek to regain lost revenue in a very fast manner.”
Deepsea carriers worldwide recorded a collective loss of US$15 billion last year.
The 15 members of the Transpacific Stabilisation Agreement (TSA) warned that even though prices had increased, they were not back at 2008 levels.
Along with some other carriers, Maersk has announced it is deferring implementation of a record peak-season surcharge (PSS) to cover the extra costs associated with fighting the container shortage.
From 1 August, the line will charge US$750 per 20ft container, $1,000 per 40ft and $1,200 per 40ft high-cube container on westbound services to Northern Europe.
Westbound to the Mediterranean, the surcharges will be $600 per 20ft, $800 per 40ft and $1,000 per 40ft high-cube.
John Doble, VP Sales and Marketing at Container Shipping Canada, commented on IFW’s LinkedIn page: “Demand has come roaring back this year, more than even the most optimistic economists could predict. With rates reaching close to 2007/2008 levels, carriers can expect to make up most of their 2009 losses.
“Maersk’s loss in 2009 was just over $2 billion. It appears they will make all of that back this year. The container shortage which has surfaced in recent weeks will only work in favour of those increases.
“Lines can call it PSS, equipment reposition surcharge, or (because we can surcharge), the point is: if shippers have few options, they have to pay.
“Maersk, generally, takes the lead in pushing for increases, hoping others will follow. In this case, even if their competitors don’t, shippers have few options”
Shippers and forwarders have spoken out about the increasing number of price hikes and the knock-on effect it has on their customers.
Kusuplos said: “I do feel that they [carriers] are doing a great job in planting the seeds of resentment within their customer base.
“This is the beginning of yet another boom/bust cycle.”
However, in some cases the rate increases are seen as the only option because no carrier would want to go back to operating vessels that are under-utilised.
YM Kim, President and CEO of Hanjin Shipping, said: “More than ever, they [carriers] need the PSS to prepare for service contingencies and to meet schedule and delivery commitments on a sailing-by-sailing basis. And also to cover increased existing operating expenses and the increased cost of capital.”
In an attempt to tackle the container shortage situation, Maersk has begun to bring in laid-up ships. The line has also placed an order for 120,000 containers.
The container shortage is expected to last until autumn this year.
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