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Carriers Charge NVOs to Guarantee Shipments (25-01-2010)
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Space on ocean vessels leaving Asia is tight leading up to Chinese New Year in three weeks, and shipping lines are capitalizing by charging importers at least $200 per container to guarantee the shipment makes its intended voyage. Carriers are levying the charge primarily on cargo consolidators, known as non-vessel-operating common carriers. It appears direct shippers, known as beneficial cargo owners, are not being charged an extra fee to get their shipments on vessels.
“I’m still getting rolled,” said Pat Moffett, vice president of global logistics at Audiovox, using the industry term for cargo pushed from its intended voyage to a later ship. Although some of his bookings are being held over, no carrier has tried to get a dime from him to secure space, and they had better not try it, Moffett said.
Many importers, including beneficial cargo owners, began paying a $400 emergency surcharge on Jan. 15. The Transpacific Stabilization Agreement, the carrier discussion group whose members carry more than 90 percent of containerized imports from Asia, issued a voluntary guideline to that effect, and it seems to be working.
“We’re taking the full $400,” said Dave Akers, managing director of the Toy Shippers Association. Most of his members, however, are beneficial cargo owners, and they have not been approached about paying anything additional to get their shipment on a vessel, he said.
In addition to the $400 emergency surcharge carriers are charging to stem the huge losses of revenue they experienced during the recession, a number of lines are hitting up NVOs for an additional $200 to $400 per FEU to secure space.
The capacity crunch in the Pacific is occurring for two reasons. Carriers last year were caught with a significant capacity overhang when imports from Asia suddenly dried up. Freight rates dropped precipitously from about $2,000 per FEU to less than $900 for a brief period last summer.
Carriers responded by removing vessels from the trade, combining services with other carriers in vessel-sharing arrangements or slowing their ships. As a result, capacity tightened considerably last fall, and the space constraints have carried into the new year.
This situation was compounded in January by a surge of imports as manufacturers in Asia fill orders before the Chinese New Year celebration that starts Feb. 14. Factories close for up to two weeks during that time.
The import surge is therefore expected to be temporary. Vessels will sail light during and immediately after the celebration. The rolling of cargo will end, and carriers will be unable to charge NVOs extra to secure space on vessels.
Source: Journal of Commerce
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