Rates are back in the news as contract season sees rising prices and fluctuations, putting pressure on negotiated General Rate Increases (GRI) with climbing spot rates. It might seem like a simple case of supply and demand driving costs, but long-term, the decisions made during contract negotiations last a year; one of the benefits of signing onto a contract is locking in lower rates by promising to ship a minimum number of containers, allowing carriers to plan for capital and capacity.
Complications arise when rates are volatile, locking in rapidly decreasing rates will mean paying more than spot market rates for a minimum number of boxes, while locking in rates that are depressed means paying GRIs or Peak Season Surcharges (PSS) applied by the carriers, or struggling to get equipment. Since rates have been trending down but still fluctuating, planning for the future is difficult in this market.
These are the times when close relationships with carriers, representatives, and overseas partnerships are the most crucial. The connections we build between our businesses gives us a broader field of play, and brings benefits to our clients while retaining options and flexibility.
The situation has been volatile for a few years now, never knowing what problems would rise up and bungle the supply chain. Unstable rates can lead to blanked sailings, where carriers cancel portions of a trip because of low demand. This can upend the schedule, overcrowding later vessels which leads to rolled cargo and other delays.
Having a strong logistics partner working on your behalf who can advocate and intercede with carriers will help you navigate the best ways to secure rates and equipment during volatile times. The dedicated, knowledgeable staff at Edward J. Zarach & Associates are familiar with the best ways to save time and money shipping ocean freight. From dedicated container shipping to expedited LCL services, we have custom-tailored solutions ready to deploy for any cargo conundrums.