Ocean freight rates on the trans-Pacific could double as a soap opera with the dramatic nature of sweeping change we’ve seen in the past three years. Over the course of thirty-six months, the threat of the pandemic turned into a full blown global crisis and volatility exploded across the logistics market. Where spot rates soared to unprecedented levels, they have naturally retreated, dipping lower than comfortable for some carriers. ZIM Executive Vice President Xavier Destriau stated, “If we don’t get the rates that we believe makes sense for us to continue sailing we will stop sailing.”
One can only wonder where the equilibrium was when contract rates were astronomical, despite the carriers knowing they’d eventually balance out. Were they supposed to be in balance when ocean rates were so far out of whack? Regardless, the request for rate stability comes as carriers are under intense scrutiny for poor practices regarding detention and demurrage fees and refusing containers loaded with US exports in favor of moving empty boxes back to Asia.
If the pandemic taught us anything, it’s that carriers are more likely than not going to continue moving cargo between the US and Asia, despite fluctuations in price. It only takes a single hiccup in the supply chain for the market to upend and require carriers to direct their focus back to the trans-pacific. Despite micro-economic outliers, trade between the US and Asia is ever a large, hungry beast. Even when near-shoring, ally-shoring and re-shoring options gain more traction, many countries in Southeast Asia are prime locations for new manufacturing bases.
At Edward J. Zarach & Associates, we’re always watching carriers to help our customers understand which suppliers have their best interests at heart. With the FMC declaring new rules on June 15th, we’re looking for a more equitable experience as we move to a post-pandemic world. Doing our best to provide quality service is our mission, especially in times of disruption or uncertainty. If you understand that facing the next wave of logistics challenges requires a skilled partner like Zarach, reach out to us today.