By Arthur Chen.    Photo : wirestock

If the liners do not have contracted piers in the US ports, they will be vanished by next year. It is an unspoken rule in shipping market.

At a blink, we are in December 2021. It is time for the negotiation of new contracts for none US routes in next year. It is said, the shipping lines are arrogant and ignore some BCO (Beneficial cargo owner ) clients. The Asia to Europe routes are currently in the contracts of renewal time, and shipping lines are picking up the most ideal targets, filtering out major cargo owners, hoping to sign up long-term contracts with them at high freight rates for next year. However, on the Asia to Europe routes, due to the freight rate gap between the long-term contract rate and the real time market rate in 2021 by several times, some cargo owners refused to start negotiations on the contract renewal. The shipping lines seem to be firm, and there is currently no room for a turnaround in the high contract rate set in next year. Perhaps the cargo owners are facing the unequal treaty and are in confounded by the huge increase in ocean freight. As far as the current shipping market are beneficial to liners and it is no negative predictable change in favor of shipping lines in the coming year, it can be said that in the past 20 years, shipping lines have never had such an advantage. Therefore, if the cargo owners does not renew the contracts and accept the target high freight rates, it is very likely that their space and future real time market prices next year may have them in trouble. The liners believe the bull market in the ocean freight will not be end too soon. In recent weeks, some gossip have been reported that many BCO clients complained about the arrogant attitude of the liner negotiating teams who asked them either accept proposals they offer or just leave. 

In additionally, freight forwarders are also entering into negotiations on new contracts for none US routes, but they have to overcome many obstacles. It turned out the sales staff of liners have fully agreed to the contracts, but after reporting back, the liners HQs changed their attitude and insisted on  providing firm details of freight volume information before considering the new quotes of contracts. Obviously, it can be seen that carriers’ attitude towards cargo owners and forwarders on the goal is to increase long-term contract freight rates. The Asia to US contract is negotiated for renewal in March and April each year, and it will take effect from May. However, the current long-term contract rate is far more than 3-4 times than previous years, and coupled with the uncertain factors of whether the congestion in US ports will be relieved, it can be expected that there will be a round of fierce bargaining process between the BCO clients and the shipping lines. 

Another gossip message can be shared with readers. There are some shipping lines that originally only operated intra-Asia feeders but because of the high freight rates on the U.S. trades, they have invested ships to enter the U.S. market in order to earn high profit from there.  But in the past few months they have been kicked to the iron plate.  From an interesting comparison, a container ship named BAL Peace only unloaded at the Port of Los Angeles 80 days after it’s departure from Qingdao; while another container ship named President Wilson took only 10 days to unload Asian cargo to port of Los Angeles on the pier. 

Why? Because these "temporary ships" newly added to the US routes may have encountered "hidden rules." Those ships that own piers in the Port of Los Angeles/Long Beach can obviously get a faster berthing sequence. In additionally, ships in the same alliances do not need a long queue time neither. After studying the time from the departure of 62 trans-pacific ships from the last port to the official call at Los Angeles/Long Beach from November 5 to November 19, it was found that those shipping lines that previously only operated regional routes, such as China United Shipping and Boya’s ships usually have to wait the longest. According to data from 62 ships, the average single voyage time from Asia to Los Angeles or Long Beach unloading was 28 days. Taking China United Shipping as an example, the average data reached 34 days. In additionally, even after the containers were unloaded from the ports, they may take more days for a temporary ship to be withdrawn. According to our company's experience, they took more than 2 weeks on average to pick up the containers. This is why the three major maritime alliances do not care at all about these” temporary ships” that earn short term high benefit. Because the major ports of the United States are in their hands. Only they know when the “unspoken rule” would be imposed.

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