SIMIC

IT would appear that US retailers are enjoying the good news from collapsing ocean shipping rates, but a new problem is on the horizon and they are now bracing for delays as some carriers try to prop up prices by cancelling voyages.
Retailers had paid as much as US$20,000 to move a container of goods during the worst pandemic disruptions, reports Reuters.
Carriers like MSC and Maersk are trying to boost prices by cancelling voyages, which could spark a new round of cargo delays as containers get bumped from one ship to the next, experts said ahead of a major US ocean shipping conference in Long Beach, California, this week.
The event, called TPM23, marks the unofficial kickoff of the container shipping contract negotiating season when carriers and their US customers ranging from Walmart Inc to mom and pop merchants and exporters of all stripes hammer out annual price and volume agreements.
Those closely watched, and often contentious, negotiations matter because the Asia-US trade lane is the most lucrative for carriers, and those contracts set the tone for talks in other regions.
Any shipper savings gleaned from those deals could come with a new headache though - late deliveries.
The Port of Los Angeles reported 17 cancelled voyages in January and warned of more to come.
"If (carriers) keep bumping containers, we could end up missing Christmas," said Isaac Larian, chief executive of Southern California toy maker MGA Entertainment.
Volatile spot rates were the first to plummet when pandemic-weary consumers shifted spending from goods to travel and entertainment. Now the gap between spot and contract rates is closing, pressured by the threat of recession and competition to fill ships, said Peter Sand, chief analyst at air and ocean freight rate benchmarking platform Xeneta.
When demand was booming, carriers raked in record profits by focusing on the most lucrative cargo. Critical customers had to jostle for space and the likes of Walmart, Costco Wholesale Corp and Dollar Tree Inc chartered ships to keep shelves stocked.
But the tables have turned, and shippers want payback for ocean cargo costs that quadrupled in some cases.
It is "shippers' revenge," said Jon Monroe, an industry consultant and North American representative of Singapore-based Transfar Shipping, whose investors include China e-commerce giant Alibaba.
"There was a time when everybody looked for a win-win. Covid threw that right off the tracks," he said.
Previously loyal customers are aggressively comparison shopping, spreading their business around and gambling on the spot market, experts said.
The nonbinding nature of ocean contracts drives customers or carriers to push for everything they can get when leverage swings their way, said Lawrence Burns, a consultant who formerly handled negotiations for Hyundai Merchant Marine.
This time around, importer and exporter shipping managers, whose costs exploded when they were unexpectedly forced into the sky-high spot market, have the upper hand.
"They've been called into the CEO's office too many times in the last two years. They're coming back for blood," Mr Burns said.
Asked if large customers are signing deals at near spot rates, MSC vice president Allen Clifford said, "I suppose some are." Soren Toft, chief executive of the world's biggest carrier, declined to comment onstage at TPM23 on Monday.
Customers and carriers do not often discuss contract talks, but in recent earnings calls officials for Walmart - the No 1 US container shipper - furniture retailer La-Z-Boy, toy maker Mattel Inc and musical instrument seller Yamaha said they expected to benefit from lower rates.