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Strong Demand Powers Rate Increases

September 5, 2018

Rates continue to escalate in the Eastbound Transpacific market. Strong demand, reduction of capacity, and the threat of tariffs are all contributing factors that are causing the high rates shippers are being forced to pay to move their cargo from Asia to the United States. Ocean rates to both the US East Coast and US West Coast are 53% higher than they were this time last year.

Ocean carriers are taking full advantage of the strong demand by implementing additional increases upwards of $1,000 per container. In a normal peak market, an increase of $1,000 would be dead before it even hit the market. The demand is so strong in the current market, the carriers are bullish that a significant amount of the $1,000 will be successfully implemented. Industry experts believe the strong demand will begin to taper off the first part of October. Some analysts are predicting demand could come to an abrupt halt forcing carriers to start slashing rates earlier than normal heading into slack season.

For years, carriers and shippers have been preaching the importance of working together as partners not adversaries. The goodwill that existed between the two parties has taken a gigantic step in the wrong direction. In many cases, carriers chose to abandon long time relationships in favor of chasing the highest revenue paying cargo. Carriers are quick to claim that shippers do not allow them to operate at break even levels. Shippers claim that carriers have the power to dictate contract rates and control the spot rate market. One thing is certain, the anger with shippers is very real and the backlash against the carriers will be strong once the pendulum swings in the shippers direction.

 

The International Housewares Shippers Association (IHSA) is a not-for-profit association formed to benefit companies belonging to the International Housewares Association (IHA). Through the combined leverage of members, IHSA negotiates freight contracts and partners with other logistics providers to lower supply chain costs.

IHSA’s main function is to negotiate the lowest possible transportation rates and provide the highest quality service for all participating members. Additionally, IHSA members receive valuable market intelligence and advice through regular newsletters and briefings.

IHA member companies looking to reduce their ocean freight costs or have questions about an ocean freight issue are encouraged to contact IHSA to learn about the program.  Contact IHSA at +1-513-489-4743 and learn more on our website.

Filed Under: All Posts, IHSA Shippers Association, Industry Resources Tagged With: Carrier rates, IHSA

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