Just when you thought it was safe to go back ON the water...
Despite the below image, your container is not at risk of being swallowed up by Jaws' bigger brother Megalodon. As JW Hampton celebrates our 159th year of having the serious privilege to handle your shipments with personal service while not taking ourselves too seriously, there are some ongoing industry concerns to share.
The list of concerns begins with a few different acronyms:
GRI – general rate increase – to celebrate the new year the steamship lines implemented a roughly $1000 GRI on 1/1 and indications are that another GRI of $2000-$3000 per container will be implemented on 1/15. With the current space situation many shipments that are ready prior to the 1/15 GRI are being given bookings with post 1/15 sailing dates and thus getting stuck with much higher ocean freight rates.
PSS – peak season surcharge – sometimes the steamship lines will pass off or "hide" part of the GRI under the PSS so that the GRI does not seem so high.
SCS – Suez Canal Surcharge – while this is not in effect currently the issue is that due to the ongoing war, vessels are avoiding the Red Sea and are no longer utilizing the Suez Canal. Instead they are sailing around the Cape of Good Hope at the southern tip of Africa which has led to longer transit times and significant delays.
PCS - Panama Canal Surcharge – a few hundred dollars have been added on for vessels sailing through the Panama Canal as a result of the historic low water levels. The 32 daily reservation slots are targeted to be down to only 18 slots by next month. And these slots are not just for cargo vessels but for dry bulk carriers, product tankers and liquefied petroleum gas (LPG) tankers as well. The waiting time is increasing and could be out to 2 weeks before we know it.
Speaking of Jaws and the Houthis, the likely sharks and pirates in this situation are the steamship lines. Despite the words of Gordon Gekko, greed is not good for importers, consumers, nor our economy.
After realizing BILLIONS of dollars of profit as a result of their price gouging in the post-Covid shipping world, once ocean freight rates "normalized" in 2023, steamship lines are now doing whatever they can to supplement the meager (?) hundreds of millions of dollars of profit they are now stuck with.
Their strategy of blank sailings where vessels skip ports to reduce supply, combined with the usual increase in demand due to the approaching Lunar/Chinese New Year (CNY) on 2/10 has led to space being tight and containers being rolled. Equipment shortages could be coming.
Meanwhile rail congestion on the West Coast remains a reality and the East Coast labor unions are already planting the seeds for a potential strike when negotiations begin this summer on their contract that expires on 9/30. Please don't shoot the messenger.