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Tuesday, June 18, 2019

Maritime Logistics Professional

Improving business for carriers is costly for their customers

Posted to Far East Maritime (by on June 23, 2010

When containers began to run short the costs were always going to be passed on.

How about Maersk’s record peak season surcharge of US$750 per TEU, $1,000 per FEU and $1,200 high-cube boxes on westbound Asia-Northern Europe service from 15 July. Nice revenue, if they can get it. 

The impressive surcharge unsurprisingly has shippers throwing their toys around, so much so that Maersk issued a statement explaining its reasoning.

The line said it had run out of containers and the surcharge was need to urgently get more built and to bring ships out of lay-up to get the boxes to Asia where they were urgently required by the carrier’s customers.

But where Maersk sails, other soon follow, and it wasn’t long before a host of other surcharges were announced. According to PR News Service, Hapag-Lloyd announced general rates increase on Asia-North Europe and Asia-Mediterranean and a peak season surcharge from July 15 that in total equals the Maersk charge.

Not to be outdone, Evergreen is also looking for a hefty peak season surcharge from July 18, while Cosco Container Lines wants its relatively small hike to take place from July 15.

At first glance it seems as though Maersk is indeed tearing the backside out of it. Shippers complain that the cost of repositioning equipment, and making sure there are enough containers available to accommodate demand, is the shipping lines’ business.

They feel the costs are already included in the strong freight rates and general rates increases.

But is it right to blame the container lines for the sudden surge in demand that took the entire industry by surprise?

In the world’s factory, manufacturers have been desperately trying to get their workers back to the factories after sending them home for extended breaks. They are paying higher wages as a result. Raw materials are needed urgently to fill orders so higher prices have to be paid.

But isn’t this just the cost of doing business? An increase in sales brings an increase in costs, but it also brings a corresponding increase in revenue.

For the shipping lines, the principle is the same. The reason they need to bring in ships from lay-up and carry non-revenue-earning empties back to Asia is because there is a rapid rebound in market demand.

That means the carriers will be raking in the revenue, especially with the general rates increases that have been, or will soon be, imposed.

Charging a gigantic peak season surcharge is not on. If a bar fills with patrons unexpectedly, it can’t slap a surcharge on top of the beer price just because it is running out of glasses.

Tags: Tanker oil devon OPEC petrol prices tankers

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