Maritime News |Shipping News
Synopsis
Faced with forces that are upending traditional business models, shippers around the world are pleading with regulators to rein in ocean-freight carriers.
Ocean shipping rates are expected to stay elevated well into 2022, setting up another year of booming profits for global cargo carriers — and leaving smaller companies and their customers from Spain to Sri Lanka paying more for just about everything.
The spot rate for a 40-foot container to the U.S. from Asia topped $20,000 last year, including surcharges and premiums, up from less than $2,000 a few years ago, and was recently hovering near $14,000. What’s more, tight container capacity and port congestion mean that longer-term rates set in contracts between carriers and shippers are running an estimated 200% higher than a year ago, signaling elevated prices for the foreseeable future.
Large customers of sea-borne cargo like Walmart Inc. or Ikea have the heft to negotiate better terms in those deals, or absorb the added expense. Smaller importers and exporters — especially those in poor countries — that rely on carriers to haul everything from electronics and apparel to grains and chemicals, can’t easily pass those costs along or weather long periods of stretched cash flows. The situation is throwing a spotlight on the market concentration of shipping lines, and their legal immumunity from antitrust laws
“Small- and medium-sized enterprises are being badly affected,” said Amruth Raj, managing director of Green Gardens, a vegetable processor based in rural India. After container rates shot up in the past year, more than 50% of his company’s capital was wiped out when European buyers balked at the higher costs. “They exploit our desperation.”
In the developing world, it’s not just business survival that’s at stake. Achil Yamen of the Cameroon National Shippers’ Council, raised concerns about inequities in Africa on a recent conference call hosted by the United Nations trade body.
Source: Indiatimes
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