Digital Edition

July 20 2020

Issue link: https://jocdigital.uberflip.com/i/1267640

Contents of this Issue

Navigation

Page 23 of 47

24 The Journal of Commerce | July 20 2020 www.joc.com Special Report Peak-Season Forecast: Ocean and Intermodal Rail WITH US IMPORTS from Asia showing signs of recovering, trans-Pacific car- riers have imposed a highly unusual third general rate increase (GRI) in one month's time. Importers and forwarders say carriers, who filed July 1 GRIs as high as $1,500 with US regulators, are quoting figures between $250 and $800 per FEU. There's nothing new about carriers levying such charges as the summer–fall peak shipping season for retailers approaches. However, carriers had already implemented GRIs on June 1 and June 15, so the July 1 increase was the third in a month, an unusual occurrence even during periods of high demand. Car- riers and their customers said rates will continue to rise even though volumes are down almost 10 percent from the first five months of 2019, according to PIERS, a sister company of The Journal of Commerce within IHS Markit. Eight carriers last month filed July 1 GRIs with the Federal Maritime Commission, the US's top maritime regulator. Hapag-Lloyd filed a $1,500-per-FEU GRI; APL, Evergreen, HMM, Yang Ming, and Ocean Network Express filed $1,000 GRIs; and Cosco Shipping's GRI was $800 per FEU. Hapag-Lloyd also posted a $1,500 GRI for July 20 and a $1,500 GRI for Aug. 1, according to Sea- Intelligence Maritime Con- sulting. Carriers rarely succeed in implementing the full GRIs they file with the FMC. One non-vessel-operating com- mon carrier (NVO) told The Journal of Commerce he was quoted GRIs in the range of $250 to $400 per FEU while two others said they had been quoted $400 to $800 per FEU. Kevin Krause, vice president of ocean services at SEKO Logistics, told The Journal of Commerce he is seeing GRIs of $500 to $800 per FEU. "Some are talking about a PSS [peak-season surcharge] on top of that," he said. The GRIs will apply to freight volumes shipped in excess of minimum quantity commitments (MQCs) by beneficial cargo owners (BCOs) as well as NVOs. The NVOs and BCOs said some carriers are indi- cating that peak-season surcharges may be charged on top of the GRIs. In past years, carriers often began to quote PSSs in June or July, but the surcharges were delayed until early fall, when the majority of holiday merchandise is shipped. Jon Monroe, who serves as a consultant to NVOs, said carriers were emboldened by the GRIs they imposed on June 1 and June 15, which is why they came in with a July 1 GRI. "Carriers are now more confident about their future, given the general rate increases and another on the way," he said in a late June newsletter to clients. "What is happening now is the carriers are overbooking vessels and forcing con- tainers to be rolled." Bruce Chilton, vice president of trade management at Ascent Global Logistics, said in addition to the July 1 GRIs, a number of carriers also announced a mid-July rate increase. "We will definitely see rates rise on July 1 and July 15," he said. NVOs with contracts that name specific retailers and importers are still able to ship those volumes under their contract rate, but any shipments above the weekly allot- ment must pay the additional rate. "Our allotments are pretty much used up. For anything above that, Rule of three Trans-Pacific carriers push third GRI in a month By Bill Mongelluzzo "Carriers are now more confident about their future, given the general rate increases and another on the way."

Articles in this issue

Links on this page

Archives of this issue

view archives of Digital Edition - July 20 2020