Hong Kong shippers warn lines over cost of soaring rates

Hong Kong Shippers’ Council executive director Sunny Ho said that the widely reported “chaos” that has been witnessed in the last few weeks for goods coming out of China is merely “a seasonal phenomenon and not unlike previous years”.
Speaking to The Shippers’ Voice website, Mr Ho said: “Since most factories would be closed for at least two weeks to a month as per tradition in China, there is naturally a rush for shipping out goods.
“There will be a month of little activity once the Chinese New Year starts officially on February 13.
The months after Chinese New Year are notoriously slack for shipments.
Additionally, China customs will cease working [during the new year period], another reason to rush shipments out.
“Finally, production does not resume until workers return from their annual holidays to the location of the factories.”
But Shippers’ Voice reported Mr Ho as suggesting that “unscrupulous shipping lines” are “unlikely to reap any lasting benefits from the soaring rates they have been introducing recently, taking advantage of the scramble for space on ships”.
According to the website, Mr Ho said that “shippers will remember being put under such pressure to pay more or else see their freight remaining on the quayside.
Come the low season the shippers will regain the upper hand with the choice of shipping lines and competitive rates.”
Mr Ho also made the point that idle boxships could be put back in service, changing the freight rate dynamic.
He said: “After all, there is much oversupply in the market. If freight stays at the current high level, it is sure that some companies will charter those ships that are currently lying idle and start running new services, minding also that there is an ample supply of idle empty containers too.
The entry barrier for shipping is low and the current freight level is very attractive.”
Shippers’ Voice director Andrew Traill said shipping lines that “treated their customers and the contract terms with such contempt recently, would rue the day”.
“It is a sorry state of affairs that we remain in this boom and bust state, with rates soaring one day and falling another.
“Shippers cannot go on like this: they would be far better off with some stability. Carriers too would be better off with more stability and sustainable rates.
“If you combine this situation with the issue of slow and super-slow steaming you get even more volatility. It cannot be long before shippers will ask for some of the cost savings from slow steaming,” he said.
It was time for everyone to rethink the business model and look at the service levels and standards required, Dr Traill said.
“A reliable service comes at no extra charge; a faster service might carry a premium; a slower service might carry a discount,” he said.
“Ensure the price is sustainable both for the carrier and for the market: set a contract and stick to it. Is not this a good place to start from?”