Zvi Schreiber, CEO of Freightos, said the trade war between China and the United States has maintained a longer season than in the past. Three tariff negotiations this year «have motivated many importers to charge orders and beat new tariffs,» he said. Conversely, spot rates on Asia-Europe trade routes, where there is no trade war, have fallen by 32% in the last four weeks, Schreiber said. February could be a problematic month for airlines next year. The Chinese New Year, if many factories in Asia close for one or two weeks, will be relatively early on February 5. The Global Port Tracker expects imports to decline by 3.5% from February 2018. Airlines are pleased to participate in the service contract imocation period, which begins in March, with the leverage of high spot rates during the pre-Chinese New Year storm, in order to postpone shipments before the closure of the plants. However, if spot rates fall sharply due to tariffs and the slowdown in the Chinese New Year, they could expect another disappointing contract period. In the spring of 2018, service contracts decreased by about 100 $US per FEU compared to the previous year, reaching approximately US$1,100 to US$1,200 per FEU on the West Coast and between US$2,100 and $2,200 on the East Coast. The persistence of large holiday imports and the subpoena of spring products to obtain the 25 per cent tariff on China, due to come into effect on 1 January, indicate that the maritime area in the eastern Pacific will remain close until the end of the year and that high rates will remain high. Maersk, for example, expects that about half of its business will still come from annual contracts with BCO and NVOCC shippers, but given the volatility of freight rates, cargo ships have signalled a greater shift to shorter-term contracts and cash transactions.
And british VOC comments on The Loadstar show that airlines feel they are on the front line in fare negotiations and are preparing to hit shippers with «significant» increases in long-term contracts. With so many pre-feedings of shipments taking place in the second half of this year, it seems that spot rates will likely decline rapidly after January 1, especially if carriers do not reduce capacity by accelerating dry docking of vessels for winter service or simply by cancelling sails known as «empty» routes. However, the negotiating difficulties facing European shippers are fading from those that could pit U.S. shippers against trans-Pacific cargo. Drewry suggests that contract rates could double on this line. After successfully increasing container deposit rates aggressively during the pandemic, shipping carriers are now laying the groundwork for a significant increase in annual contract rates. However, the extent to which distributors and producers will be able to preload shipments from the beginning of 2019 is limited by at least two factors. One factor is the ability of production facilities in Asia to stimulate production prematurely, and the other is the trade-off that many companies face between rising storage costs and the currently high cash market rates of early shipping, compared to lower and spotraten transportation costs, but 25 per cent shipping-related tariffs after January 1. «This is a decision that is made at the level of the CFO [Chief Financial Officer],» said Mr.
Bennett. Of course, what drives the market now is tariffs,» David Bennett, president of Americas, told Globe Express Services. «The spot rate is extraordinarily high because the market is concerned that the 25% tariffs will come into effect.» (Above: The Port of Los Angeles.) Photo credit: Shutterstock.com.