Just Wrong?

You would think that after all of the verbal and written complaints of cargo interests in recent months that carriers would be doing everything possible to calm the waters, quiet the rhetoric and simply get on with providing better services.

In the midst of finalizing the trans-Pacific service contract season, where it is assumed the carriers sought and obtained substantial rate increases, there is a new twist to servicing cargo interests. It seems that while capacity is being increased to meet traditional increases in trade, there is still some tightness, part of which may be timing as it takes weeks to ramp up capacity and change schedules.

But during this time, the ongoing tightness of space is having an effect on the spot market rates, raising them above $2,000 to, according to Drewry Shipping Consultants, beyond $2,100. Against this are the service contract rates, some of which are said to be in the range of $1,900, or possibly lower range.

Depending on how the Service Contract is constructed in terms of Minimum Volumes and any weekly guarantees of space, some recently signed service contract volume is being left behind or even being refused bookings. Think that hasn’t caused a stir? The phone and email lines are burning with outrage, much of which may be justified, depends on how the service contracts are written.

And I would think that after all of the uproar of the first quarter of this year, cargo interests would insist that service contracts be written by in a way that protects their interests regarding space and equipment.

In most instances, carriers are living up to the contract terms, but there are exceptions – and that is what is bothering shippers.

Apparently in the wake of billions in losses in 2009, some in the industry are looking at bookings on virtually a weekly basis and taking the higher paying cargo first, meaning spot market cargo, to the detriment of service contract customers.

To the degree that this is taking place, it is wrong in many ways and it will kill relationships, at least to the degree that relationships still exist.

My information is that it goes beyond that, albeit in rare instances, some shippers are paying above spot market rates to get space.

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