A DELEGATE at the S&P Gobal TMP conference in Long Beach last week emphasized that “service is always going to trump price”. However, he added: “But it has to be a fair price”.
Beneficial cargo owner (BCO) procurement managers were trying to achieve just that during the traditional start to the transpacific contract season event.

Many were accompanied by their C-suite executives, as nearly 4,000 people networked and found spaces around the halls for those initial contract discussions with ocean carriers.
The shipping lines are desperate to “rekindle relationships”, get contracts signed and MQC (minimum quantity commitments) agreed, to avoid being overly exposed to the spot market.
Xeneta’s XSI Asia to US west coast component slipped another percentage point last week, to US$1,581 per 40ft, but lower FAK rates are widely available.
A BCO procurement executive told The Loadstar he had spot cargo moving at “below $1,000 per box”, and had been offered even lower rates. But he added: “I don’t feel comfortable about it. At some stage, the rate is going to shoot right back up, there’s just no stability and we can’t budget.”
And for the US east coast, spot rates from Asia are tumbling fast – down to about $2,000 per 40ft – bringing into question the economics of the longer-transit, considerably more expensive, all-water tradelane for carriers serving the route.
The buzz around coffee and dinner tables at TPM was of much shorter contracts being agreed – for three months rather than a year – and of some of the usual 12-month contracts being index-linked to offer security for both shipper and carrier.
“My job would be on the line if I signed a long-term deal at a too high a price and then the rates crash again,” one large retailer executive said.
“We have to work together to sort this out,” she added, “it’s absolutely no use getting a silly rate and then finding that they have blanked the sailings or rolled our cargo.”
Although not specifically discussed at the TPM contract sessions, several shippers expressed concerns about the fragility of the Asia-Europe tradelanes. Many annual contract negotiations that normally happen in November and December have been put on the back-burner while volatility in the market continues.
Drewry’s WCI Asia to North Europe reading last week fell another 2 per cent, to $1,593 per 40ft, albeit that FAK ‘market rates’ from all the main carriers are about $1,000 per 40ft.
Mediterranean rates also continued to slide, with the WCI component declining 2 per cent, to $2,477 per 40ft.
And on the transatlantic, still the ‘jewel in the crown’ for carriers, the XSI reading was stable at $5,173 per 40ft. Nevertheless, Xeneta’s chief analyst, Peter Sand, believes it is only a matter of time before the inflated rates fall back to the historically stable $2,000 level.
“My best guess is that transatlantic rates will normalize within the next six months,” he told attendees during a ‘tradelane deep-dive’ session at TPM.

Source: shippingazette