Disclaimer: This is not a quantitative analysis, but rather an opinion piece reflecting the perceptions and opinions the of Sea-Intelligence management team, as expressed by the author. These pieces will become a regular feature, alongside our other, highly data-intensive products and publications.

Author: Alan R. Murphy, CEO

On February 4th, 2021, I presented our Transpacific market outlook at a JOC Webcast, where we received an overwhelming 112 questions. I have in the below tried to answer the questions to the best extent possible, but since this was written in a 13-hour non-stop energy drink- and caffeine-fueled power session ending at 6 AM, I sincerely apologise if the answers at times come across less like a professional response, and more like a Joycean mad rant.

Q: Advice for low value commodity shippers - such as wastepaper - moving US to Asia?

A: That specific market segment is clearly particularly hard-hit these days. Rates for that commodity and that trade have never, ever been profitable for a carrier, and these days, given all the other challenges, carriers may well choose to re-position a container empty back to Asia, rather than risk it being unavailable for immediate eastbound use. The only viable answer, as unfortunate as that may be, is to review your rates and then determine how to make up for the increase in other segments of your supply chain, or through price increases on your own customers. Not trying to be flippant in any way, but these are extraordinary times, and those often call for extraordinary measures!

Q: Alan, what advise can you give us on contract season coming. What leading practices can you share,

A: This question is a bit too general and almost impossible to answer. Many large BCOs have tender documents that are 100 pages long, with every word having been carefully weighed. The best advice we can give here is therefore quite general: ask yourself why you do what you do. To meet a paper goal, or to get your product to market? Hopefully, it's the latter, in which case your next step is to calculate the freight increase break-point at which you either exit the business or pass the cost on to your own consumer.

This week, we published an Opinion Piece exactly on the upcoming 2021 contracting season, at https://sea-intelligence.com/47 and there's a lively discussion going on at https://www.linkedin.com/posts/bjornvangjensen_on-container-freight-negotiations-2021-22-activity-6762785954764746752-ffQ7

Q: Alan blank sailings why not use the term as put by Lars is OPERATIONAL blank sailings as the ships as you state waiting to discharge freight all over the world notably in the USWC- no ships left to put them in

A: Good point, we will likely start flagging congestion-driven blank sailings separately, once we have defined an unbiased and structurally sound methodology, hopefully by next week.

Q: Alan mentioned that the majority of the US import purchase shift is related to the pandemic, and made a great insight (which I agree), there will be a reversal at some point. Key question - what result can we expect on the ocean market once this happens?

A: As answered elsewhere in the Q&A, yes, the rates will come back down, but not before we see normality in the seasonal flows. When this will happen, we do not know, as the underlying driver is the Pandemic. Long-term, we should no longer expect spot rates to go below cost again, as the carriers are now able to tactically tailor their capacity to the available demand (see other answers for more detail).

Q: Alan, what impact with IMO in 2021 have on capacity? Will this threaten capacity, or will IMO relax scrubbers / retrofits?

A: IMO 2020 will not be relaxed. On the contrary, that was just the beginning! IMO 2020 was merely a testing ground for whether environmental regulations could really be forced top-down. The real battle will be over CO2 and other emissions, and it is coming soon after the Pandemic.

Q: All this pandemic freight - washing machine - household items from coffee makers to fitness equipment including fitness apparel etc don’t you think it will slow down

A: Yes, it will. Household appliances have experienced a bumper year in the US, and elsewhere. When people are not able to spend money on services, and they are stuck at home, the money flows elsewhere. But you are right, for those who have just upgraded all their appliances, it is highly unlikely that they will do so again in the foreseeable future. At least for the same appliance.

Q: Any expectation that carriers may choose to opt out of alliances or have the alliances been strengthened?

A: The alliances are not going away; the carriers would simply not be able to operate and fill their behemoth vessels on their own. The carriers are fully committed to the alliance structure and have accepted that they have trade off any ocean product differentiation, in the pursuit of ever-lower slot costs. The only way alliances are only going away, is if regulators were to make them illegal, which is very unlikely, and if they did, freight rates would really shoot to the moon, as every carrier would have to reproduce the core port-pairs in each of their networks, making it almost impossible to get a direct shipment to any but the most commoditised port-pairs. We have been very critical of the mega-alliances introduced in 2015, as we firmly believe they have hurt carriers more than they have benefitted them, as the only difference now in the ocean product is the colour of the container, which few shippers will pay a premium for. A by-product of this commoditisation is that, where a price premium can be commanded, it is (and should be!) far more closely linked to the shore-side service levels than to the ocean voyage itself.

Q: Any idea where rates will land at end of contracts April 30, 2021? Have one carrier wanting to sign middle of March with a 14 month contract...

A: It is far too early in negotiations to make rate predictions. Our feeling is that contract rates will be significantly higher than last year's contract rates, but not as high as current spot rates

Q: Any thoughts what amount range Asia- USWC Fixed rate contracts will settle in April for BCO and NVOCC?

A: It is far too early in negotiations to make rate predictions. Our feeling is that contract rates will be significantly higher than last year's contract rates, but not as high as current spot rates

Q: Are the Global demand slides dated based on departure POL or arrival POD?

A: The CTS demand slides no. 13-17, the rate slides 36-40, as well as our capacity figures on slides 6-11 are timed to POL departure, while US Census data on slides 19-34 and our reliability figures on slide 42-45 are timed to POD Arrival. We are trying to get the industry to move a common standard, but it is practically impossible, maybe through DCSA. From Q2-Q3 this year, we will make it possible to pull most of our data with your own custom timing, e.g. POL, POD, and even custom definitions like Panama Canal crossing, mid-ocean, or "Shanghai equivalent" or "New York equivalent". We've suggested the same to the US Census Bureau, but they didn't think we were quite right in the head...

Q: Are there any signs of when vessel capacity on the TP EB may start to ease? What about container availability in Asia? when do you believe it will improve?

A: The "easy" answer is that the situation will improve when two things happen. Firstly, demand needs to flatten out, i.e. be more evenly distributed seasonally. Secondly, importers need to return the containers and chassis in accordance with their agreements with carriers. None of these is ACTUALLY an easy answer, but they are two of the important events that NEED to occur in order for some sort of equilibrium to be restored. There ARE no more vessels available for deployment, and even if there were, it won't make a significant difference until congestion eases. In this respect, please also do not forget that several ports are very hard-hit by COVID infections in their work-force, with over 1,800 workers down in Los Angeles (just LA, not even including Long Beach) alone!

Q: As an analyst I am noticing China exports are down starting February, what is your take on this. Usually we should see a surge before CNY, but this year it looks a different story, is this because of Container Box availability, Rates, or something else going on

A: I honestly don't know, and we are always wary of trusting Chinese data we haven't been able to validate. If this is data pulled out of INTTRA, then please feel free to share :-)

That said, the carriers have practically cancelled 2021 Chinese New Year in terms of blankings, and Q1 TP capacity is not just up 55% on the down-year of 2020, it is also up 32% on 2019 (see slide 10), so the carriers are either seeing sustained volume growth over 2019, partly carried by backlogs, or they have suddenly come across a newfound faith that they can sail under-utilised without bleeding money across the ocean. I'm clearly in column 1.

Q: As a shipper of perishable product we are finding the delays are crippling our agriculture industry from the west coast. Any thoughts on when it will get better and or is there anything we can do to get through this difficult time?

A: Some Ag-exporters have had success with enforceable contracts. Just make sure you understand that the commitment goes both ways and be prepared to honour it. We are not in a position to recommend individual platforms, but they shouldn't be that hard to find.

Q: Attendee Feedback

A: Thanks!

Q: Based on so many vessels awaiting to berth at US ports now, with hundreds of thousands of containers still needing to be offloaded and delivered...……….do you believe that the extremely high premiums out of APAC will have another huge surge?

A: Another surge is unlikely at this point but cannot be totally ruled out.

Q: BCO groups are looking to get FMC involvement in an effort to curtail carrier ocean rates increases - If in fact FMC acts, do you feel such action would set a dangerous precedent to potentially set up the premise for carriers to also asking for government intervention should rate tumble again

A: Yes. And the FMC will not act on anything other than outright and provable market manipulation/anti-trust. In the absence of either, the FMC takes the view that the market sets the price.

Q: Beside the major Chain like WM, Target, etc. Are major carriers willing to sign direct contract with Importers or they rather sign their contracts with NVOCC?

A: We do not believe there is any reason why carriers would abandon their practice of signing contracts with both NVOs and BCOs

Q: Can further vessel capacity be re-deployed to the Transpacific from other trades with softer demand, even temporarily?

A: Everything is possible, but it is not immediately apparent why a carrier would want to do this, when congestion is running rampant in the US. Re-directing capacity to the US, especially to the West Coast, is currently practically tantamount to laying up the vessel! If a carrier found that it was losing money on another trade, this might drive such a decision, but the operative word is, "might", because once you leave a trade, it is very hard to get back in. More likely, carriers would blank sailings on those trades.

Q: Can we get a copy of this presentation?

A: Yes, the slides will be made available to those that complete the JOC survey, and the full recording will be available to watch next week.

Q: can you comment on port congestion in major ports and what is being done to resolve issues -are they all COVID labour shortages....Busan, LAX, LB?

A: No. They are a toxic cocktail of COVID infections in the labour force, demand seasonality shifting and increasing (also largely driven by COVID), a lack of chassis and containers, and decades of bad practices on the part of both carriers and shippers, all coming home to roost.

Q: Can you elaborate on your statement "low value shippers will be squeezed out" Thank you

A: A shipper with a cargo value of USD 250,000 per container will - RELATIVELY SPEAKING - care much less whether the freight rate is USD 2,000 or 4,000, as they absolutely need to get that product to market, and every day it stays in China, they are losing massive amounts of money. The shipper with a cargo value of USD 10,000/container will likely have lost any profit when the rate goes from USD 2,000 to 4,000, thus are getting "squeezed" out. Not necessarily squeezed out of getting equipment, but rather squeezed out of their own market, unless they are prepared to either eat the loss, or able to pass the cost increase on. 

Q: Can you please discuss CTNR shortage and its impact on rates/capacity constraints vs blank sailing impact?

A: The equipment (container) shortages were, firstly, caused by the blank sailings in 2020-1H, and the resultant missing repatriation of containers from terminals and depots in primarily North America, Europe, and the Middle East. However, in the past six months, the unprecedented demand boom into the US has been the primary cause. The shortage has been exacerbated by carrier reluctance to order new equipment at the height of the pandemic, as no-one was expecting the sharp, and unprecedented recovery we've seen in 2020-2H. The vessel capacity and equipment constraints, the long time required to produce additional equipment, and the nearly complete price inelasticity of demand in container shipping, are the reasons why freight rates have shot up to unprecedented levels.

The issue now is not so much vessel capacity constraints, but rather a global lack of sufficient equipment, and while the shortage is in effect driven by the demand boom in the US, equipment supply is much more fluid than vessel supply, there's been contagion of the equipment shortage into other trades with much weaker demand, driving up spot rates globally, as the existing cargo cannot move when the equipment has been "soaked up" by the Transpacific. We do, however, detect an improvement of sorts in China this week pre CNY with various carriers, but overall the container shortage in general will likely continue for 2021-1H, if not longer. The rampant congestion around the world will have a further continued negative affect on equipment supply. Quite apart from what we see in LA/LGB, when we see up to 14 days' berthing delays,  at a relatively small port like Auckland, you just know there is a big problem.

Last week, we published an Opinion Piece exactly on container shortages, at https://sea-intelligence.com/44 and there's a lively discussion going on at https://www.linkedin.com/posts/bjornvangjensen_on-container-shortage-and-its-many-moving-activity-6760613327598096385-FsXa

Q: Can you share any insight into 2021 /2022 capacity changes driven by new ship building and ship retirements?

A: No, sorry, not at present, as I do not have our updated figures in front of me, but it will be a topic in an upcoming issue of the Sea-Intelligence Sunday Spotlight.

Q: Can you speak to FMC's effort addressing carriers' practice to reposition empties to Asia that impacts U.S exporters without adequate equipment in U.S.

A: This is not within the FMC's remit. The market sets the price, and if the price is not compensatory, then no company in the US is obliged to sell their services at a loss up-front, even if they have chosen to do so so in the past. The only exception might be in war-time, but that's (thankfully) not where we are.

Q: Could you please show slide 18 again?

A: Yes, the slides will be made available to those that complete the JOC survey, and the full recording will be available to watch next week.

Q: Demand in NAM was so low in the first half of 2020, and the second half of 2020 was catch up. Furniture was up 39% from September to November, and the majority of that would probably be Patio furniture. I expect demand to stabilize after CNY, do you agree?

A: I think post-CNY is too optimistic, I believe we will need to be at least Q2, and possibly Q3, and smart people are saying it might well run for the rest of 2021. One thing I do know, is that anyone saying they do know have only shown how little they actually know.

Q: Do you anticipate global regulators having to step-in and push back on carrier capacity alliances?

A: Not at this point, and in fact, the existence of alliances is probably beneficial for the market, as noted in an earlier reply. Alliances do not set prices. That would be highly illegal, and we have no evidence that this is taking place, and plenty of knowledge that the carriers have all placed safeguards to prevent rogue elements from engaging in such activity. The risks clearly outweigh any benefits of outright - and highly illegal - commercial collusion, and the regulators are watching very closely, due to the protections that container shipping enjoys. Remember, for almost 50 years, carriers could engage in fully legal collusion on rates, volumes, and supply, and they still couldn't make money, as someone would always underbid the agreed tariffs, to win that extra market share. In any event, those days are- thankfully - gone.

Q: Do you foresee Asia-Europe Trade not stabilizing until the end of the pandemic, similar to NWC?

A: The Asia-Europe trade is far from being as strong as the Transpacific trade, and the high rates on Asia-Europe are not driven by Asia-Europe demand, but rather primarily due to contagion of equipment (container) shortage, driven by the unprecedented demand on Transpacific, driven up the rate across all trades, so that the high-value shippers with the highest willingness to pay get the containers, driving up rates for everyone else. As this stopped being a “local” TP supply/demand imbalance in September/October, but rather the high US demand driving up rates globally, we are likely not going to see rates go down again before lockdown restrictions are lifted widely across the US, and Americans start to shift their consumption back to services.

When will the near-Apocalypse end? I have no better guess than you, I'm afraid!

Q: Do you have any insights to share on the challenges of returning empty containers to North American rail yards for ultimate return to Asia?

A: The bottleneck is the availability of chassis, mainly because many shippers are using mounted containers in their warehouse yards as storage units, far in excess of agreed detention free-times.

Q: Do you see any change in possibilities of further consolidation of carriers? Will high ocean freight rates affect that possibility?

A: Carriers are on a high. Consolidation is on hold while they write down their debt loads, and any further consolidation attempts risk attracting very, very close scrutiny from regulators. First moves, as we are already seeing, are new-building orders. Also, all the obvious targets have already been taken, and there's not much scale advantage for the big ones left through acquisition, that they couldn't get organically. In liner mergers, 2+2 NEVER equals 4. It equals 3 if you're lucky, but usually after a few years, you're back to 2, but at least you removed 2 from the market. I hope my math makes sense.

Q: Do you see governments intervening here to put some limitations on the carrier's ability to continue increasing rates?

A: At this point, anecdotal evidence suggests that the Chinese authorities have attempted to do so, with some success. The US authorities would be very reluctant, and the jury is still out on the EU. The only thing we can say for certain at this time is that every major competition-regulating agency is looking at it and following developments closely, but that is NOT the same as concluding that they will do anything about it. Generally, unless anti-competitive practices are present and provable, most of these authorities would be unlikely to intervene at this point. Also, this is a double-edged sword, in the sense that those same authorities would then also be forced to intervene if the market were to change in the shippers' favour. Be careful what you wish for!

Q: Do you think the drop in industrial products / organic chemical volumes was solely related to production & demand or do you think there were significant amounts of frustrated shipments, with GDSM/ecomm goods getting space on the ships because they were shipping at much higher freight rates?

A: Assuming that this question is related to US exports to Asia, look no further than mutually punitive tariffs for the answer. If related to US imports, the answer to your question is probably "yes", but a qualified "yes": look closely at your commercial terms and your own performance as a shipper in terms of delivering on those terms.

Q: Does the port congestion going to extend thru Q2?

A: To some extent most likely, until demand flattens and dock workers return to work after recovery from/vaccinations against COVID.

Q: Don’t you believe allocation/volume commitment will be the only solution for low value shippers?

A: Yes. But be prepared to meet that commitment. They say you only get one chance to make a first impression. If you don't meet your commitment, do not expect a second chance. Also, commitment in terms of volume alone will not be a silver bullet. Carriers, like any other producer of goods and services, do, and are entitled to, make their own estimate of whether a request from a customer is worth fulfilling. What you ARE of course entitled to as a customer, is for an agreement to be honoured. Just don't forget that so is the service provider...

Q: Europe demand is lower today so if the USA eases will EU INCREASE CONTINUE TO SHORTAGES/DEMAND costs

A: No, the driver of the demand boom and the resultant equipment shortage is the US. If US demand eases, so will the current crisis (see other answers)

Q: Excellent

A: Thanks!

Q: Excellent series!!!

A: Thanks!

Q: For small businesses relying on imports, do you have any suggestions on how to reduce freight charges? Are there alternate ports to explore?

A: If you are loading cargo to the North America West Coast, there really are only 7 viable ports. Prince Rupert, Vancouver, Seattle, Tacoma, Oakland, Los Angeles, and Long Beach. Seattle and Tacoma are interchangeable, as are Los Angeles and Long Beach. However, shifting cargo from e.g. Los Angeles to Vancouver is highly unlikely to be viable, neither from the standpoint of economics, nor from the standpoint of transit time. Additionally, all of these ports are actually also facing severe congestion at this time.

We intend to address this issue in considerable detail in the next issue of the Sea-Intelligence Sunday Spotlight, which coincidentally will be made freely available, as it is our 500th issue! You will be able to find it on our website and LinkedIn page on Monday, or you can shoot me an email and I will send it over.

Q: Has Adding more vessel capacity already exhausted port/terminal capacity???

A: Yes, absolutely.

Q: Have container manufacturers increased production capacity to help offset the wrong container in the wrong place effect that CV-19 has created?

A: Container Manufacturers in China are fully booked up well into 2021-Q3.

Q: Have westbound rates increased by a higher percent than eastbound rates?

A: There's a lot of volatility in westbound rates, and the generally available spot rate indices are of questionable coverage, but they suggest that where eastbound spot rates have grown 150% Y/Y, westbound spot rates have grown 200% Y/Y, so currently 3X what was paid a year ago. We will in the coming weeks be expanding on our partnership with Xeneta and will be able to utilise their very strong rate coverage, to not only have a much better picture on back-haul rates, but actually provide some much needed perspective on low/mid/high spreads, to give a more nuanced picture on what is actually being paid in the market. Keep an eye on the Sunday Spotlight in the coming weeks, where we take a deeper look at the oft-neglected back-hauls.

 That said, ocean spot rates obviously do not consider land-side and equipment-related surcharges, which are also going through the roof. On top of that, whatever you have to pay means nothing if you can't get the empty box to load, and until back-haul rates equal head-haul rates LEVELS and not just growth, carriers will prioritise empty repositioning into China over back-haul shipments. Will westbound spot rates go to 4-5K/40HC + 1-2K in equipment and space commitment? I don't think so, and so for the coming months, US exporters will be left hanging as the empty boxes go back to China.

Q: Hearing some rumours that Japan >>> US WC port pairs are being reduced to less-optimal paths. Any insight?

A: Not specifically on that level of granularity. I would be happy to dig out our data on products offered, schedules, blank sailings, transit times, reliability, delays, etc., but that is unfortunately not something I can offer within the scope of a Q&A.

Q: Hello Mark and Alan, great show as always. Thank you.

A: Thanks!

Q: Hi I’m XXX from XXX. When do you think the rates can establish as a normal? I’m talking about ASIA-NAEC route

A: As answered elsewhere in the Q&A, yes, the rates will come back down, but not before we see normality in the seasonal flows. When this will happen, we do not know, as the underlying driver is the Pandemic. Long-term, we should no longer expect spot rates to go below cost again, as the carriers are now able to tactically tailor their capacity to the available demand (see other answers for more detail).

Q: Hi Mark! I see you have stats on Blank Sailings in the presentation slides. Are these net of Extra Loaders? If not, do you have those service stats as well?

A: In our weekly Blank Sailings Tracker report, if on a service, a total of 5 sailings occur over a 5-week period, then we do not count any blank sailings, irrespective if the individual sailings took place in exactly the scheduled weeks. Imagine a service with a Sunday departure, delayed 1 day into the next week: Do we now have a blank sailings followed by a normal and an extra-loader? No, obviously not. If a sailing is blanked on service X in week 5, but an extra-loader is deployed in week 7, then we do not count it as a blank sailing. If the extra-loader is deployed on service Y, then we will still count a blank sailing on service X, and an extra-loader on service Y.

If, on the other hand, you want to know the exact number of vessels and capacities deployed in each week, with no balancing out of blank sailings and extra-loaders, then you can get that in our weekly Trade Capacity Outlook report.

Q: Historically in big increase years for fixed rates, we have seen lower spot rates, do you think this risk is still in play in 2021?

A: It is far too early in negotiations to make rate predictions. Our feeling is that contract rates will be significantly higher than last year's contract rates, but not as high as current spot rates

Q: Historically, competition between carriers took care of maintaining lower rates. What do you believe has changed now that this is no longer happening? And will that behaviour be sustained?

A: Competition resulting in lower rates only occurs when supply exceeds demand, whether in totality or on the part of an individual market player changing capacity dramatically, and/or looking to "buy" market share. Currently, demand far outstrips supply almost across the board in the main trades.

Q: How are the steamship lines planning to prioritize container load? Will contract have priority loading or will premium have priority loading?

A: For the short- to medium term, anyone willing to pay premium rates + surcharges will get the empty boxes, everyone else will have to fight to for the leftovers. I know it sounds harsh, but it is the reality of the moment. Also, it's been quite some time since liner vessels ran on steam ;-)

Q: How can we get a copy of the presentation?

A: Yes, the slides will be made available to those that complete the JOC survey, and the full recording will be available to watch next week.

Q: How do Mr. Murphy see the development of perishable and grain container trades for the Q1-Q2 while constraints seem to be an existing issue still?

A: If US export, then you're at the end of line and Q1-Q2 will likely be challenging, unless you're willing to pay import spot rates + equipment surcharges. If US imports, then you're fighting alongside and against everyone else, but at least the empty equipment is heading towards you, and not away from you (see other answers to similar questions).

Q: How do you expect carriers to go about upcoming negotiations regarding the "promise" of xx containers annually? Do you think they will only give organizations a certain % of what they ask for & require all to go to the spot market more?

A: As always, this will depend on the rates and seasonality patterns agreed. There is obviously no obligation on the part of carriers to provide a given number of containers, unless shippers collaborate and keep demand profiles updated. Typically, a carrier will grant a shipper a weekly allocation of the annual commitment divided by 52. So if you nominate a carrier for 5200 TEU, they will grant you 100 TEU/week. If you deliver 10 TEU in week 1, and 142 the following week, it's up to the carrier to determine whether they will load those containers or charge a premium for the additional 42.

Q: how does a govt contractor importer absorb a 100 % ocean rate increase when our margins are not in the same galaxy

A: You have my deepest sympathy, but I really have no useful answers, as if you can't pass on the cost to your customer due to locked govt contracts, then the only choice is to try to weather the storm and carry the cost for now and try to get it covered through future contract negotiations. If that's not possible, then there's very little choice but to walk away from that govt contract, if at all possible.

Q: How much have you seen carriers and exporters/importers base their routing choices based on the COVID-19 response along the route (ports, borders, rail, warehouses, etc)?

A: This is not something we have been able to track to that level, so cannot answer it with any confidence. We know of some vessels that have been delayed or outright prevented from departure due to COVID-19 positive tests, but we have no indication that the anecdotal evidence we have, is in any way representative, as there's no structured reporting and collection of such data.

Q: I keep hearing that destination warehouses are FULL. and that there is great supplies waiting to ship out of Asia still. at what point might the buyers cut their POs, if they have to much inventory?

A: Shippers often face Minimum Quantity Commitments (in manufacturing as well as shipping), resulting in the need to often ship more than required. Obviously, there is a break point, but often these contracts are signed in accordance with the calendar year, and many shippers are not necessarily in control of shipment quantities. The answer is therefore highly dependent on the shipper and their individual agreements with contract manufacturers

Q: I read that Evergreen is planning to build 10 new giant vessels. Do you feel that this is driven by this chaotic period? Also, do you feel this can generate a sort of "bubble" if the global GDP goes down this year?

A: These new-buildings, at 23,000 TEUs each, are only realistically deployable on the Asia-Europe-Asia trade, and as such, any bubble would only be immediately visible there. And only IF there is actually an economic contraction. However, to the extent that they will replace existing, smaller vessels, the phenomenon known as “cascading” (like the replaced vessels being moved to e.g. the Trans-Pacific) may occur. However, to the extent that some of the replaced vessels are chartered, they can simply be re-delivered to their owners, who would then have to find alternative deployment for them, or lay them up. It is, at this point, impossible to predict whether this will or will not happen, but it has certainly happened before.

We will dig into this in the next-coming 500th issue of the Sea-Intelligence Sunday Spotlight, which exceptionally will be made freely available on our website and on our LinkedIn page.

Q: I'm an Alberta agri-food shipper of 20 ft containers to Japan using Vancouver Port and direct carrier vessels to Japanese Ports. Any comments on the Vancouver-Japan Lane specifically for the remainder of Q1 and into Q2 and beyond as to congestion/delays and also rate increases.

A: Not specifically on that level of granularity. I would be happy to dig out our data on products offered, schedules, blank sailings, transit times, reliability, delays, etc., but that is unfortunately not something I can offer within the scope of a Q&A.

Q: If that the contract "Is not worth the paper its printer on", why do they need to be filed with the FMC

A: In oversupply years, shippers (the average shipper, not the upright person reading this answer) will ignore any MQC signed, will demand all-in rates on contracts with agreed BAF&CAF&THC, and will want contract rates renegotiated when spot drops below the contract rate. In under-supply years, carriers (the average carrier, not the upright person reading this answer) will completely ignore allocations, will suddenly have lost all recollection of what the word “guarantee” means, will rock&roll and cut&run, and say “Sure, we can move your freight at the right rate, but did you bring your own box?”. I left the "real" side of the industry for this cosy gig 10 years, so was there in 2010 at the last container shortage, and I have vivid recollections of a colleague in an ICD shouting: “I've got 20 empty high-cubes over here, who's got cash, bidding start in 5 minutes?”

A real-world judge would be sick to the stomach of what we are ready to put the word “contract” on (see details of the proceedings of the elsewhere-mentioned TCC case, where it's rumoured that a judge at the US Court of Appeals for the Second Circuit did not take well to the abundant use of "air quotes” when saying the word contract).

Ensure that your agreed commercial terms are incorporated into the contract that is filed with the FMC - and that you live up to them as well.

Q: If the carriers in the TP shift volume to the PNW, is NWSP and port infrastructure prepared to handle the increase?

A: Probably not. Please bear in mind that not only are all USWC ports suffering severe congestion, but landing the container is only half of the picture. Unless you own or lease your own chassis, the “last mile” delivery is equally important, and the availability of chassis is currently a major issue.

We will dig into this in the next-coming 500th issue of the Sea-Intelligence Sunday Spotlight, which exceptionally will be made freely available on our website and on our LinkedIn page."

Q: Impact of IMO standards for Greenhouse Gases or energy efficiency index?

A: Sorry, that is an entire conference topic in itself, and not one I can answer in a Q&A. That said, we do cover all relevant market drivers in our weekly analytical report, the Sea-Intelligence Sunday Spotlight, and have on many cases covered in detail topics related to environmental concerns, emissions, and IMO rules and local country / EU regulations.

Q: Is there any way to determine when, for example, the US will have enough exercise bikes?

A: As a person weighing twice of what my elevator claims an average person should weigh, I will refrain from any tasteless jokes about Americans and their need for exercise bikes. More generally, for commodity analyses, I would look at long-term commodity trends in data from e.g. US Census Bureau or PIERS, against demography, consumer spending, disposable income, labour, retail/wholesale inventory, and consumer trend data, possibly peppered with a bit of first-mover hype data from social media data aggregators, if I was looking to pick-up on emerging or high-value consumer trends (e.g. there always been demand for exercise bicycles, but if you were watching the right social media, you'd catch that prices would go up from USD 200-500 to USD 1,000-2,000 due to the Peloton/Echelon hype), and then consider what impact trade policy, raw material and labour costs, production capacity, and local production options would have on the supply side.

Q: JOC's website tools show Shanghai-LA benchmark surged to US$4,000 but have stayed whereas Hong Kong to LA jumped to US$6,000 the past month. Why the difference?

A: Sorry, I cannot answer this question as those are not our figures, but will forward it to the JOC for them to reply.

Q: Just a comment, as a large BCO, mutual agreement clauses in your contracts are one sided only if you want space

A: More detail is required to answer this comment. Clearly, additional space over and above your weekly allocation is granted at the carrier's sole discretion, at least as a starting point. We would recommend trying to negotiate some "elasticity" into those weekly allocations. If you do not, then you are at the mercy of the carrier, as hard as that sounds

Q: Looking at this longer term, what are some actions you suggest shippers to take?

A: Investigate your end-to-end supply chain costs for efficiencies, rather than focusing narrowly on freight rates

Q: Lost connection

A: Sorry!

Q: Not really a question but I am a DFN shipper out of the US West Coast (OAKLAND). It was great hearing and seeing the global shipping issue we all face. Of course for my industry it's rather frustrating that, even though there are fewer carriers, the carriers we do have don't seem to be organized enough to hold responsibility for the last minute booking cancellations, delayed vessels and rolled bookings. And we have no choice - we have to just make do and deal with it. It has wreaked havoc on my shipping department.

A: The major bottleneck for all DFN shippers, and particularly US-Asia (i.e. westbound) is the availability of containers, which, in turn, is driven by the ability and willingness of inbound shippers to return those containers. As noted previously, this is currently a major issue, as many importers are often holding on to containers far in excess of agreed free-times. As for your ability to hold carriers accountable/liable, this will to a large extent depend on the commercial terms you or the DFN agreed up-front in your tenders

Q: Rates continue to raise, but cargo is not moving any faster and schedule reliability stinks. Why am I paying these higher rates?

A: Because supply is nearly exhausted, while demand profiles have shifted to seasons that usually see a slump in demand

Q: Regarding the non-macroeconomic supported growth in demand, is this to say this surge in traffic is more supplier push driven rather than demand pulled?

A: No, it is still demand-driven, but there does seem to be a case of bull-whip effect in inventory build-ups along the supply chain, which could explain some of the growth above consumer spending growth, but not all of it. The numbers do not make sense to me on a macro level, but there's clearly boxes being moved, and people willing to pay for it.

Q: Should we plan for 25-35% increase in transit times through end of 2021

A: Quoted transit time, yes. Challenge your carrier to give you realistic transit times. Hint: no proforma schedule is ever realistic...

Q: So FY 2020 Global container growth will beat the FY 2019 - or as I put OB freight from Asia as a whole will be up around 6%

A: Nah, we expect that FY2020 Global Demand will be down -1.2% Y/Y.

Ok, to be honest, the CTS figures came out 7 hours ago, and I just looked them up. FY2020 Global Demand is down -1.2% Y/Y. North America imports are up +16% Y/Y in December, and FY2020 North America imports are up +4%

Q: THANKS ALAN and Mark!

A: Thanks!

Q: Thanks Alan,

A: Thanks!

Q: Thanks Alan, do the vessel on-time arrivals measuring arrival near the port or at the berth?

A: Our schedule reliability measure is always actual berthing against scheduled berthing. For a shipper, there's little consolation in being told that the vessel was on-time to the anchorage position, but it'll be another 8-10 days before it touches the quay.

Q: The carriers have never honoured our MQCs. I agree with Alan that this will not further improve relationships. This is driving the market to further commoditization and bigger boom bust swings. The instant information has the liners taking as much as they can when the can which will drive shippers to have to take advantage of the drops to a greater advantage. Every consultant will say they can buy better. Every buying decision will be over reviewed.

A: Without much more information, this question is impossible to answer. Which trades? Which direction? Can you demonstrate that you have done your part? Are you sure that this is a deliberate action on the part of the carrier, and not driven by weather, congestion, and other force majeure situations? If so, you may have a case, but it is important that you be able to demonstrate that these failures were all carrier-driven. To make an extreme case, again, you can't award a carrier 1000 TEU per year, deliver a total of 10 for the first 51 weeks of the year, and then book 990 in week 52. We know this is highly unlikely in most cases, but it is not unheard of. The devil is in the details, specifically in the commercial terms you agree up-front.

This week, we published an Opinion Piece exactly on the upcoming 2021 contracting season, at https://sea-intelligence.com/47 and there's a lively discussion going on at https://www.linkedin.com/posts/bjornvangjensen_on-container-freight-negotiations-2021-22-activity-6762785954764746752-ffQ7

Q: The strong demand may be the new normal.

A: It may well be for some time, but it won't be forever. The pandemic, and the transport shifts driven by it, are everyone's bosses these days, and we would not advise gambling on that situation changing any time soon

Q: Tighter carrier management of supply suggest higher sustained rates going forward. Correct?

A: In the near-term, probably. But “going forward” is far too general a term to use for predictions, particularly in a business as cyclical as container shipping. That said, container shipping fundamentally changed in 2020, not in terms of the Pandemic, but in how the carriers RESPONDED to the pandemic. In the 20 years I've worked in this industry, you could set your clock to how carriers would respond to a demand crash like what we saw in 2020-1H: They would all be desperate to fill their vessels with the now lower demand, as they would all lose money if they sailed underutilised, and this tit-for-tat erosion would drive spot rates and later contract rates down to marginal cost levels. See 99 USD/TEU from Shanghai to Brazil in Feb 2016, or the global market crashes of 2009, 2001, and any time before that in the past 40 years. I predicted on April 5th, 2020 that would happen again, and I was sorely wrong!

The carriers have now reached a level of market consolidation, advanced IT, and communication tools, faster and more operationally focused tactical capacity management, and the devolution of tactical capacity management decisions from senior management to operations centres, that they can now effectuate tactical capacity management through blank sailings and extra-loaders, so they can almost perfectly tailor supply downwards to the available demand. That we lost the whole “liner” part of “liner shipping” in the process, seems to have been deemed a worthwhile sacrifice, and one that was viewed that customer would accept. Welcome to the new world of Tramp Container Shipping, where we sail whenever we fill a vessel :-(

Q: Typically, a strong import market into N. America is good for exporters (space & equipment availability). What needs to occur to re-gain the carrier interest/focus on exports (backhauls to Asia)?

A: For US importers to return the equipment and chassis on time, and for westbound rates to be viable compared to the benefit the carrier could gain by moving the box back to Asia empty, and thereby being able to turn it around faster. If the westbound rate doesn't even pay for the crane moves, and it would be more profitable for the carrier to immediately deploy the container for an eastbound move (as opposed to having it sit in an importer's yard in China for weeks), then the conclusion writes itself.

Q: Understand spot market rates and you can equate that to someone who is consider a day trader or gambler. However the other side of that equation is that long term inventor or contract holder. What happens to those BCO's that have contract rates that are not honoured?

A: It depends on how you have been able to deliver steadily on the weekly volume allocation you hopefully agreed and codified with your carrier at the time of contracting. You should make sure that those are made part of any contract you file/sign, but equally understand that this is a two-way street. If you deliver what you promised, you have a right to hold the carrier accountable for doing the same.

Q: We expected market to come back by Q1 but looking at market looks like this might get worse and go on till Year end.. started with Asia, now US and Europe started facing space constraints... what’s your views on same.. does China, EU and US maritime laws working on something to streamline this and control the very high freight rates.. how many suppliers or consignee will survive with such high freight and for how long

A: As stated elsewhere, the Chinese regulators may look into

Q: What are your thoughts on carriers approaching BCO's to sign contracts early to be valid through April of 2022?

A: The only reason carriers are approaching BCO's to sign new service contracts now is because they perceive a softening of the market on the horizon. Their push is to lock in MQC's now which is a complete load of nonsense given that MQC's have by and large been ignored by carriers for many months now. BCO's that have already been duped into signing early at much higher rates will be going back to carriers sooner or later when the market softens. It’s going to be a messy contracting season on TP.

Q: What are your thoughts on freight rates in the latter half of 2021, and how would you negotiate 2021 contracts to take advantage of potential dip in freight rates.

A: At this point, the pandemic is a major driver of freight rate increases, and we do not have the information that allows us to make a reasonable prediction of when the pandemic will end, and when lockdown restrictions will be lifted. It may well be that elevated rates will continue through the year. It is of course possible to create index-linked or shorter-term contracts, so long as you understand that, like the equities market, you can also lose. The answer therefore depends on your appetite for risk.

Q: what contribution does Canada have to the growth in North America?

A: Assuming the question is operational and not related to direct inter-country trade, the answer is that Canadian ports on the West Coast (Prince Rupert and Vancouver) play a fairly major role in servicing the US Mid-West. If you mean Canada's share of the TP trade, then I don't have that number readily available, but when worked at a liner company 10 years, it was 9%, if that's any help. I'll update this answer once I've found the correct answer on Monday.

Q: What do you feel the contract rates will be for 2021 China to WC? % higher?

A: It is far too early in negotiations to make rate predictions. Our feeling is that contract rates will be significantly higher than last year's contract rates, but not as high as current spot rates

Q: What do you see for ocean reefers having ability to go further inland for DTD deliveries due to high demand to get equipment returned?

A: Depends. Are your reefers live or NORs? Is there an outbound LIVE reefer demand from your end destination that is not met by current supply? If the answer to the last question is yes, then the chances are high that you can strike a deal. If not, carriers would be highly unlikely to give it any thought.

Q: What is the percentage increase on contracted rates for 2021?

A: It is far too early in negotiations to make rate predictions. Our feeling is that contract rates will be significantly higher than last year's contract rates, but not as high as current spot rates

Q: What is the YOY difference in grain volumes?

A: Transpacific Grain imports are up 11.9% Y/Y on a weight basis, in Sep-Nov 2020. Exports? Sorry, don't have the figures, but do send me an email, if you need the data.

Q: What is your take on the development of dedicated premium services by ZIM and CMA CGM? Are they simply a near term response to the current environment of uncertainty, blanked sailings, congestion from mega ships, container shortages, etc, or are they the front edge of a new long term development in the market?

A: Firstly, I should stress that we as a policy do not speak publicly to the commercially viability of specific/named products or services offered by any individual carrier, and outside of our fully-documented and rigorous quantitative benchmarking metrics, we generally refrain from commenting on individual carriers and/or services, except where exceptional circumstances demand it. We are aware that we have a very large audience across all major industry stakeholders, and poorly-worded commentary from a small circle of industry analysts can have - and have often had - an outsized influence on individual carriers' business.

Generally speaking, premium-services cater to a niche market, and they have historically not been a success-story, when operated by global carriers as part of a broad service portfolio. It has been tried many times in the past, and few (if any) have survived the test of time. I am fully aware that I will now receive a lot of angry emails, making it clear that I'm simply not paying proper attention, and that THIS time, service X is something completely different from anything offered in the past, and the customers really love it, and they are willing to pay the premium.

I may VERY WELL be wrong this time, but I have been burned too many times in the past, where I have taken a liking to fast, little, nifty, small-vessel service out of origin port X and into slightly obscure destination port Y, with mind-blowing transit times and really impressive reliability, marketed through recently purchased sub-brand Z, and usually with a cool website with lots of pastel colours and stylish transitions of black-and-white stock-photos of young, diverse, wide-dark-framed-bespectacled thoughtful-looking people, that look way too happy to be working in liner shipping. Unfortunately, sub-brand Z is owned by behemoth "ABC LINE", whose bread-and-butter is grey-in-grey commoditised six-partner alliance services with several slot charters with no way to product differentiate, in the same trade as brand Z. Within long, the market starts to turn and premium services don't have quite the same pull with customers when spot rates have tanked, and big key clients of ABC LINE are demanding access to the Z-service under their ABC LINE contract. There's now a lot of talk at management level at ABC LINE about how Z brand is cannibalising their core product, and how customers are experiencing brand confusion, and now ABC LINE's CCO is absolutely livid that the Customer Engagement Survey shows that brand Z customers love the great customer service, personal touch, speed, flexibility, and value-added services provided by Z, because “That's what we deliver here at ABC LINE, right?!”. Six months later, when the market has been depressed for a while, Z-line is “operationally integrated” into ABC LINE but they'll keep the pastel coloured website online, while Z-line customer service, invoicing, and support is now moved to a shared service centre in Mumbai (you know, because Z-line customers actually prefer the cost savings), and now when a Z-line customer finally gets through on the phone, after having been on hold for literally 4 hours, the CS rep accidentally says “Welcome to ABC Line”. A year later the Z-line website breaks because someone thought it would be great to build an enterprise website in Java, but nobody notices, except for a humble container shipping analyst, with a tear welling in his eye.

Parts of the above fictional story may be based on several real-life experiences.

Q: what would you suggest we tell our buyers on length of delay NAWC/NAEC (7-10 days?)

A: At present, the NAWC average vessel delays are edging upwards to 8-10 days, depending on port, while the major NAEC ports are starting to hit averages of 3-6 days. Note, though, this is just the vessel delays relative to proforma schedules, and do not account for any delays in final destination delivery dates due to slower vessel operations caused by COVID infections, resultant work pressures, land-side terminal congestion, trouble with getting chassis, longer gate exit wait times, longer truck turn times, and any IPI-related issues. Regrettably, we're a container shipping research company, and at present, our data end when the container touches ground.

If vessel schedule reliability and vessel delays are important measures in your supply chain, then I would recommend our monthly Global Liner Performance report. Please send us an email at This email address is being protected from spambots. You need JavaScript enabled to view it. to receive a complimentary copy.

Q: When can we expect to see reefer repositioning to occur from Asia?

A: Sorry, we do not (at present) have any reefer expertise in house. I know a few smart reefer advisors, so drop me an email if you would like me to put you in touch with them.

Q: When do you expect the added charges to go away?

A: When demand and supply is more or less back in sync.

Q: When does capacity management run up against the aims of the Shipping Act? and what happens to the ocean carrier industry?

A: Absent clearly demonstrable anti-trust or war, not any time soon, if ever.

Q: When does JOC expect reliability to turn the corner and start getting better?

A: I can't answer for the JOC, but we don't believe reliability will get back to "normal", which was never really that good, before US demand subsides, and we don't know when that will be (see other answers). we may see a slight improvement in April-May as the weather gets better in the NAEC/NEUR ports, but nowhere back to "normal" levels.

Q: when renegotiation contracts what % of volume should we contract and what % would you recommend leaving to spot rates?

A: There is no single answer to this question. It depends on your demand elasticity, as well as your appetite for risk. Do not forget that there is no risk-free way to do this.

Q: When will more empty containers be dropped in the US instead of going back to Asia?

A: Not anytime soon, I'm afraid. If you can pay back-haul rates matching head-haul spot, you might get the boxes, but right now, US exporters are the last in line (see other answers for more detail).

Q: While I can appreciate that it has been a buyers’ market for so long, that can also be justified by horrible on time performance metrics. Now we have record horrible metrics and the prices go up- meanwhile the profitability of carriers (ex. ONE LINE) skyrockets. Do think there that sea carriers will value partnerships enough to enter reasonability in these items? It has always been a 1 way street from my experience.

A: The carriers have clearly sacrificed customer relationships for short-term profitability, and I am hard-pressed to argue that they should have acted differently, although I fully sympathise with all shippers that have been devastated, by not only record rates and no boxes, but ridiculous service levels, congestions, and massive delays. That said, carriers have lived through a 10-year nightmare (granted, these wounds were mostly self-inflicted), and any carrier CEO who had gone to his board in January and said: “Yes, we decided against taking full advantage of the first golden opportunity in 11 years, as I strongly believe that our contract customers will remember and value that we honoured all our commitments to them, and kept rates down to a reasonable level, despite the spot market throwing cash at us and screaming for boxes, and I am sure they will stay loyal to us through the next storm” would now be out of job, and likely committed to an institution.

It is only 5 years ago that Asia-Europe spot rates were USD 200/TEU and Shanghai-Brazil was USD 99/TEU, and only a few industry leaders on the shipper side we're calling this out, and saying that carriers need to be able to cover their costs (and I now have the great pleasure of them having joined Sea-Intelligence management). EVERY single carrier employee with more than 5 years of experience has seen countless of their friends and colleagues pack up their desks in tears over the past decade, and few of them felt that “value partnerships” meant anything then.

Not trying to be flippant but trying to convey the emotions we see when we talk with carriers. Not senior management, but the people we work with in operations, commercial, and operations. Heck, a few of team have left positions at shipping lines in very recent years.

Q: Will ocean carriers continue to grow their space allocation to NVOs versus BCOs and how will that affect contract rates for 2021-2022?

A: Every 3-4 years, carriers do not want to deal with those finicky BCOs that always complain about the smallest things and do not understand the complexity and beauty of the brilliant services they are providing, and they would much rather deal with the NVOs, who understand them and their business, who talks and looks like them (and probably used to work in their department). In the other years, carriers realise in a frantic panic that the NVOs having been eating their lunch for the past 30 years, and they now hate them with a burning passion. I forget which year we're in now.

Q: will ocean rates from Asia ever come down to normal rates? to the USA from Asia? our ocean rates have more than doubled from Asia to USA port?

A: As answered elsewhere in the Q&A, yes, the rates will come back down, but not before we see normality in the seasonal flows. When this will happen, we do not know, as the underlying driver is the Pandemic. Long-term, we should no longer expect spot rates to go below cost again, as the carriers are now able to tactically tailor their capacity to the available demand (see other answers for more detail).

Q: Will rates drop? When? and most importantly by what percentage will they drop?

A: As answered elsewhere in the Q&A, yes, the rates will come back down, but not before we see normality in the seasonal flows. When this will happen, we do not know, as the underlying driver is the Pandemic. Long-term, we should no longer expect spot rates to go below cost again, as the carriers are now able to tactically tailor their capacity to the available demand (see other answers for more detail).

Q: Will the situation become worse? Is there any on-going solution from related parties?

A: Depends what you mean with situation: Rates, reliability, congestion, equipment and space availability, transit times, yard space, chassis, surcharges? Considering they are all at all-time worst, I certainly hope not. I'm rarely wrong, but when I am, it is usually when I say “Well, at least it can't get any worse than this”.

Are there some things that will get worse? Yes, as we published recently in the Sunday Spotlight, Bunker Oil prices are now up 50% over the June-November 2020 steady rate of 300 USD/MT, which means BAF surcharges will go up in Q2 and Q3, on top of everything else. Our latest reliability figures are for December 2020, and East Coast port are always level shifted down in Jan-Mar due to inclement weather, so would not be surprised if we dropped from 25% in Asia-NAEC to 10-15%, and from 40% in Transatlantic WB to probably 15-25%.

Will it get any better in container shipping, no, not in the short- to medium-term, unless the US is thrown into a shock recession, which is hard to argue would be better, overall. When will the Apocalypse end? (see other answers) Maybe Q2, May during Q3 “peak” season, maybe the World burns for the rest of 2021. We don't know, but it will shift, as US imports are already outstripping US consumer spending.

Q: Will the slides be available after the presentation?

A: Yes, the slides will be made available to those that complete the JOC survey, and the full recording will be available to watch next week.

Q: will the slides be available for the audience?

A: Yes, the slides will be made available to those that complete the JOC survey, and the full recording will be available to watch next week.

Q: Will this condition continue through the west coast port strike?

A: Sorry, I should have clarified that I was referring to the 2014-Q4 to 2015-Q1 labour dispute in the US West Coast ports.

Q: Will this presentation be made available to those that attended?

A: Yes, the slides will be made available to those that complete the JOC survey, and the full recording will be available to watch next week.

Q: Will this recording be available after this live broadcast?

A: Yes, the slides will be made available to those that complete the JOC survey, and the full recording will be available to watch next week.

Q: Will this slide show be available after the presentation?

A: Yes, the slides will be made available to those that complete the JOC survey, and the full recording will be available to watch next week.

Q: Will you supply us with a copy of the slides? I cannot make out many of the details.

A: Yes, the slides will be made available to those that complete the JOC survey, and the full recording will be available to watch next week.

Q: With freight rates at current levels will this not entice new players to enter the trades? Example the new China service (name eludes me) utilizing smaller vessels into the Asia Eur trade?

A: Unfortunately, the barriers to entry in container shipping are incredibly high, the existing players enjoy some exceptional protections, and there's plenty of government money involved, so it is almost impossible for any new or existing small players to enter the market, in any significant manner. For TP-WC, you need at least 7 vessels, and with anything less than new, fuel-efficient 10,000+ TEU vessels, you cannot compete with the incumbents' slot-cost. Note, there are still a few niche carriers in TP-WC (Matson, RCL, SM Line, Wan Hai, Westwood, and ZIM), but they have been pressured out of all the other East-West trades by the alliances. The niche carriers - and the niche brands of alliance carriers (e.g. APL and Zim) - offer niche services, often to/from niche ports, and often provide exceptional service or schedule reliability in “normal” times (see e.g. ZIM, Matson, ICL, and APL into the US), but... They usually also come at significant premiums, which there seems to be a “niche interest” to pay for. In the case of Matson, they are also a Jones Act carrier, which affords them extensive commercial and operational advantages.

The last time we saw new players enter the TP trade was in 2011, following the post-financial crisis boom of 2010 (the last good year). Those new entrants are all bankrupt now. Look into Hainan PO and The Containership Company (TCC), the latter run by good friends and former colleagues of ours, and ended up being abused quite a bit. The TCC case is a touchy subject as many shippers and NVOs were impacted by the fall-out, but as we were also quick to publish at the time, we ourselves lost a good deal of money on the TCC bankruptcy, as they were clients of ours when they went bust... Still have great respect for the guys that tried to do it differently. Also, do not forget that a large portion of trade into the US does not stop at the dock. Being competitive on IPI costs is equally important, and this is one of the main reasons the barrier to entry is so high. The rail companies in the US, for example, won't even get out bed for anyone but he very largest customers!

Q: With the high costs on the import freight, would you see the purchaser or production happening near home? Do you see any change in pattern on domestic purchasing and production? And this will lessen the demand of freight rate to go down?

A: Near-shoring will have some impact, but it will be limited. So far, it’s more talk than action, and I've been told of the impending death of the deep-sea for at least the past 20 years. Asia dominated by China will continue to be the World's factory for quite some time to come.

Q: WRONG! There IS enforceability. BUT, there is little willingness to enforce contract terms.

A: Partially correct, but only partially. As in another answer, if you have allocated 1,000 TEU to a carrier, deliver 10 in the first 51 weeks of the year, and then show up with 990 in week 52, you will not be able to enforce this, unless you have explicitly stated this in your contract (and no sane service provider would sign it). The Devil's in the details, and we urge you to take a good, long look at your commercial terms. However, you are correct, e.g. in the sense of liquidated damages, which few carriers ever charge. However, doing so or not doing so is more of a commercial decision than a legal one, except in particularly egregious circumstances, like the TCC debacle of many years ago.

Q: you mentioned some increases in growth from the recovery in South America as well. Which countries in South America led this growth?

A: If I did say that, then it was a mistake, as nothing in presentation was supposed to be about South America, and I had not been looking into South America as preparation. What I did mention, is that the unprecedented level of tactical capacity management we have seen the carriers undertake in 2020 to balance supply & demand, should not have come as a surprise, as we have seen them "test" this in smaller trades in recent years, including the Asia to East Coast South America trade.

Q: Your rates don't indicate the "premium fees" that are being implemented to simply get space currently.

A: Unfortunately, all available spot rate indices are entirely based on ocean charges, and do not include any land-side or equipment surcharges. We don't make the rate indices, but if we did, we would count equipment and other surcharges separately. We may do just that one day.

Q: What advice can you give shippers to deal with the impact of the changing ERD's? We are forced to load containers to meet a specific ERD when it changes, we are stuck with loaded containers which leads to detention and demurrage bills from the carriers. They do not make any adjustments to account for the schedule changes.

A: I am terribly sorry, I have a very comprehensive catalogue of industry TLA's (Three Letter Acronyms), but ERD is new to me.

Q: can you discuss the recent trend of increased FCL container load in US west coast LA/LB ports relative to LCL- is this a trend here to stay?

A: Sorry, really do not have any data or insights into FCL vs LCL, and not sure who would be the expert in this. Probably a lot of my 3PL/4PL friends are now very angry with me.