Will the Hanjin Grinch Steal Christmas?
By golly, it looks like Santa may just not make his rounds everywhere this holiday season. This is no joke. Shippers are reporting that Hanjin has had huge effects on their inventory with their goods stuck in a container at sea and they haven’t been able to get them all out. Well, they can get them out, but not without paying hefty costs to whoever is posing themselves in an advantageous position to help. Everyone is jumping at an opportunity to make money off Hanjin’s demise.
That said, the once starving carriers are having a heyday, though it may be temporary. Shippers are reporting globally that carriers have been breaking contracts and now claiming there is no available capacity, with the prices, you guessed it, being jacked up.
Wait, wasn’t the talk up to last month all about overcapacity? The seventh largest liner’s downfall has affected global trade with a flip of the switch. The struggle is real.
The once safe locking-in-long-term-contracts strategy at a ridiculously low price, doesn’t seem is going to hold any longer. Shippers are now being forced, in many cases, to go on the spot market with one to three months quotes not being contracted.
As the year comes to and end, the tendering/bidding season starts for many European shippers. Large-volume shippers who were once basking in their long-term contracts low rates, will get a reality check when carriers will deny renewing contracts at the same low prices as last term. Ouch.
With Golden Week (the first week of October) nearing, Chinese travelers will be ready to bust out for seven days abroad and have a shopping frenzy. That’s the expectation, at least. However, with delayed cargo, Golden Week 2016 will have enormous impact on European importers, and it may not turn out to be too golden after all.
However, the fall of Hanjin is more of wake-up call for other carriers and the industry as a whole. I would even bet that the Hanjin crisis could be just the beginning, before some real shake up in the industry starts to happen and carriers can dig themselves out of their graves.
Katherine Barrios is chief marketing officer at Xeneta, a company which provides a database of ocean freight rates.
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OCEAN LOGISTICS: CARRIERS