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  May 6th, 2024 | Written by

Shippers Frustrated as Spot rates Rise With Demand

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As demand surges on the Asia-European trades, carriers and forwarders find themselves grappling with escalating spot rates, leading to frustrations among shippers and logistical challenges. The unexpected tightening of space has heightened concerns about shipments under long-term contracts being rolled, adding complexity to an already volatile market.

European forwarders report a surge in inquiries from customers facing allocation issues, attributing the dilemma to the disparity between contract rates and soaring spot rates. With carriers prioritizing higher-paying cargo during peak periods, the situation has raised questions about the origin of this sudden surge in demand.

Maersk CEO Vincent Clerc shed light on the situation during the first-quarter earnings call, suggesting a period of restocking among European importers. With a notable 9% growth in volumes into Europe, the trend reflects a shift from cautiousness to restocking as consumption holds better than anticipated.

Spot rates on key trade routes, such as the Shanghai-Rotterdam and Shanghai-Genoa legs, have seen significant week-on-week growth, further exacerbating concerns among shippers. Many are already paying premiums to avoid rollovers, signaling a market under strain.

The introduction of new Freight All Kinds (FAK) rates and peak season surcharges by major carriers like MSC and Maersk adds to the complexities faced by shippers. With rates set to triple and additional surcharges imposed, concerns arise about the justification and transparency of these fee hikes.

Shippers express frustration over the lack of communication from carriers and the rapid escalation of surcharges, questioning their necessity and impact on the overall supply chain. The tightening space, attributed to schedule slidings rather than blanked sailings, further complicates matters, leading to reduced allocations on long-term contracts.

As the industry braces for continued volatility, forwarders warn of challenges ahead, anticipating elevated rates and capacity constraints well into the peak season. The uncertainty surrounding rate fluctuations and space availability underscores the need for adaptive strategies and effective communication between stakeholders to navigate the evolving landscape of global shipping.