Freight rates rise as containers become hard to find

THE shortage of containers is expected to continue for the immediate future, a development that is pushing freight rates up dramatically, say American bicycle importers.

"Starting from January, carriers decided to cut the number of shipments to the US from Asia. This situation is expected to continue for the immediate future, although how long is not exactly clear," Brad Parkins, purchasing agent for Newbury, California's Giant Bikes, reported in the Bicycle Retailer & Industry News.

"Giant, as well as other importers, has been experiencing periodic challenges booking shipments this year due to container space shortages," he said.

The report noted that combined high demand from importers to move Asian products to market and fewer containers are causing prices to soar.

"Rates did drop too low last year and all of the companies were losing big money. But they started to cut space, and artificially increase demand with the crescendo coming before Chinese New Year," said Arnold Kamler, president of Parsippany, New Jersey bike importer Kent International.

"Every single company dishonoured their contract and as an importer you had the decision to stick to your principles and demand the contract be honoured and get no containers shipped, or compromise and pay higher and higher prices," he said.

The situation has prompted carriers participating in the Transpacific Stabilisation Agreement (TSA) to demand an US$800 rate increase per 40-foot container on the Asia to US trades in new contracts, which would push freight rates back up to 2008 levels.

According to the report, China Cosco and China Shipping expect the higher rates to be accepted.

"I expect freight costs will be about 80 per cent higher than one year ago. They were too low one year ago, but they have gone too high which is normal," said the Kent company president.

"We expect the freight rates to soften in the summer. Space remains tight but will loosen in about one month. You can get all the space you need now if you do not mind paying stupidly high prices," he said.

Source: www.schednet.com