Container ships are running full on the westbound trans-Atlantic as shippers scramble to complete their annual contract negotiations with carriers at a time when the new P3 Network and other expanding alliances have not yet finalized their new service schedules.
The P3 alliance carriers — Maersk Line, Mediterranean Shipping Co. and CMA CGM — are extending last year’s contracts at last year’s freight rates until they can implement their new service schedules, even though space is tight as they try to even out shipments delayed by weather this winter. Some of the carriers in the G6 Alliance and the expanded CKYHE Alliance are also extending last year’s contracts while they are still adjusting their schedules. Other carriers are seeking rate increases in the new contracts.
“With all of the issues with the alliances shaking out, there’s a lot of turmoil in the market because of what’s going to happen with the changes in alliances and their port rotations, and where their allocations fall,” said Alison Leavitt, managing director of the Wine and Spirits Shippers Association, who completed negotiations in Barcelona last week with the association’s 13 trans-Atlantic carriers. “None of them are talking rates yet, because they have not finalized where they are going, so we’re doing a lot of extensions.”
Some vessel-sharing agreements have fallen apart, and others have been reshuffled as carriers try to figure it out. “It’s a mixed bag. Some don’t want to risk [having customers] jumping around and want to keep their market share stable, while others are insisting on an increase,” she said.
|Top U.S. Containerized Imports From the Mediterranean|
|Ceramic and mosaic tiles||26,711||30,848||35,866|
|Source: PIERS, the data division of JOC Group Inc.|
But when the alliance carriers sort out their new schedules, they are very likely to seek higher rates. “They are very, very confident about some growth in the trans-Atlantic and of course confident that they will be able to issue some increases,” Leavitt said. With the volumes the WSSA needs to book on behalf of its member importers, it is committing to space with every steamship line because it needs all the space it can get. “We need the allocations on every line, so we will take increases with some of them, and the ones that are status quo will get more business.” Vessel space has been in short supply this winter for the first time in a few years, partly because of weather-related problems. The WSSA “wants to have all of the service options available,” even at the cost of higher freight rates, she said.
The WSSA meets with its carriers in a different European city every year to negotiate annual contracts for the U.S. importers that are its members. This year’s negotiations in Barcelona included arrangements for shipments to the U.S. of Spanish wines, which are among the European wines that are in the most demand in the U.S.
Wine imports, which constitute the largest U.S. import commodity by volume from the Mediterranean and South Europe, are holding steady, despite a 1 percent decline last year. “The U.S. market for European wine is relatively stable, but it’s a mature market,” Leavitt said. “Spain is seeing some growth, but overall U.S. demand is not increasing.”
At the same time European demand for U.S. wines, especially California wines, is increasing. “The weak dollar has certainly helped, but the European market as a whole has not yet recovered.” She said the U.K. and Ireland are very strong markets for U.S. wine and spirits and are also seeing a steady increase in U.S. demand for Scotch and Irish whiskeys. “Carriers are getting increases on the eastbound trade, and the trade lane from California to Europe is virtually full,” Leavitt said.