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Trans-Pac carriers showing flexibility in service contract negotiations
Trans-Pacific carriers are wrapping up their 2023-24 service contract negotiations with NVOs and shippers. They are signing a broad mix of deals that include fixed and floating rates. Additionally, some contracts include the price of inland rail or truck moves. Most contracts should be signed by June 1.
Negotiations with NVOs are mostly finalized with rates that float with the spot market. The initial rates are generally in the range of $1,350 to $1,500 per FEU to the West Coast. East Coast rates are roughly $1,000 higher. Rates in the contracts are significantly lower than last year.
NVOs said that carriers entered this year’s negotiation with a more flexible mindset than last year. A carrier executive said, “We’re back to pre-COVID [volumes] with softer markets for many types of business. Carriers are no longer picking and choosing what business they want.”
Carriers are also willing to book more containers that are loaded directly onto trains at West Coast ports. Additionally, they are pricing IPI moves lower than last year. IPI rates from Asia to LA-LB to Chicago are about $3,500 per FEU, one-third of last year’s rates.
Another carrier executive said liners this year want a healthy mix of IPI and port-to-port business. IPI shipments allow carriers to position containers into urban areas where agricultural products are sourced. Therefore, carriers can generate two-way moves with commodity exports.
Lastly, carriers are more open to booking containers from Asia to the USWC and including the drayage move to warehouses in a single price. These door moves are popular with retailers. Additionally, they fit into the business plans of carriers that are building end-to-end bundled services.
ONE agrees to pay $1.7 million fine in detention & demurrage case
Ocean Network Express (ONE) will pay a $1.7 million civil penalty. As a result, the carrier will avoid a formal investigation by the FMC for allegedly violating the interpretive rule on detention and demurrage.
The deal was reached before the FMC initiated formal enforcement action against the carrier. ONE will also refund or waive the contested detention and demurrage fees to shippers involved in the case. ONE did not admit to any violation of the law.
FMC Chairman Daniel Maffei said the deal with ONE “send[s] a clear message to the international shipping community that ocean carriers must fully comply with the US legal obligations.”
The FMC has collected $4.65 million in civil penalties from shipping lines over the past year. Wan Hai agreed to pay $950,000 in penalties in April for failing to observe and enforce just and reasonable practices regarding its charges for empty returns. Additionally, Wan Hai refunded the affected shippers and reimbursed detention charges on 21 invoices.
In June 2022, Hapag-Lloyd paid $2 million for improperly assessing detention charges on a CA drayage firm when there were no adequate return appointments.
About O’Neill Logistics
O’Neill Logistics is a leading third party logistics provider. We operate in California, Savannah, New Jersey. We service many verticals including Garments, Fashion Accessories, Footwear, Furniture, Home Goods, & Electronics. Additionally, we offer omni-channel distribution and all value-added services. Lastly, we focus on retail “drop shipment” fulfillment and item-level fulfillment services with same-day service offerings.
O’Neill Logistics has over 2 million square feet of state-of-the-art facilities. Additionally, we offer dray services to support the warehouses and provide distribution to retailers and wholesalers. Our reliable 3PL platform combines sophisticated technology with robust, flexible processing designs and speed-to-market gateway models.
Lastly, we aim to simplify your supply chain. We deliver exceptional service and can optimize your operational performance. Therefore, we aim to build, protect and foster strong business partnerships.
Please reach out to us if you have any questions or need assistance with your logistics solutions!
