Forwarders pay for ocean capacity shortage

Shipping lines are continuing to roll cargo and are able to increase rates because vessel capacity has remained tight since Christmas.

One forwarder told IFW this was the first January he could remember when carriers had managed to increase rates.

All-in spot rates on westbound Asia-Europe services have reached around US$1,800 per teu, compared with around $1,600 per teu in December and an all-time low of $350 last January.

And lines are continuing to roll cargo and place embargos on bookings - developments that began in Q3 last year - because space has remained tight, despite the expected downturn in volumes following the pre-Christmas peak.

"Capacity has not improved since November," the forwarder said. "We are struggling to get containers away.

"We are managing, but it’s very hard work, and we’re using all our connections to meet customer demand. Shipping lines are rolling containers left, right and centre, generally for around a week.

"Some have also been placing embargos on bookings and cutting our weekly allocation. There isn’t a single line that has been able to give us what we want."

Keith Traylor, general manager of Allport’s Tilbury office, said the forwarder had received analysis which suggested capacity on Asia-Europe was 20% lower than in Q3 2008.

Allport had largely avoided having cargo rolled by having a condition written into contracts that requires notification at the time of booking if containers cannot be loaded on the vessel named.

However, Allport was having bookings turned down.

Traylor said carriers were also cancelling rates they had previously promised if they could get higher rates from other customers.

"The reduction of capacity caused a squeeze on space during last year’s peak season and we’re still being squeezed now.

"There’s always a rush just before the Chinese new year [in February], but we didn’t see the dip we expected to see at the end of November and December.

"Consequently, carriers have been able to repeatedly push up rates."

Over the past year, forwarders have been able to get all-in rates easily, but Traylor said new surcharges were starting to appear, such as bunker surcharges implemented by some carriers.

"If they’re going to put the rates up, they should just put the rates up; there’s no need to come up with another surcharge."

Paul Goehlert, MD of Mercator Cargo, said it too had been affected by carriers rolling cargo and embargoes on bookings.

"Everybody is in the same boat when it comes to finding space.

"I think there is a bit more business around than the lines anticipated, but they are reaping the benefits now because prices are so much higher than they were," he said.