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Will high shipping rates be a norm?

Shipping

Cargo owners fear hiked rates are here to stay

The world supply chain is in shambles from congestions in major ports, and loadings cargo owners cannot afford. Shippers are visibly jaded with the chaotic environment.

High costs to persist
Negotiating chartering challenges and port congestions are no easy feats. After all, cargo owners are compelled to do so because of costs. Some were reduced to acquire their own vessels and equipment to sustain inventory distribution, others paused their contracts with big carriers and settle for smaller vessels to ship their cargo.

Hapag-Lloyd announced it would raise rates from €135 ($160) per teu and €155 per 40 ft to €140 and €170, respectively – noting the new rates remained subject to fuel, IMO, congestion and high- or low-water surcharges. These new rates will be in force from 15 September 2021. This is in spite of their involvement in Federal Maritime Commission’s (FMC) investigations from complaints of price gouging. Some cargo owners have since questioned if FMC has any weight on these shipowners.

Affordable sacrifices
The FMC announced an increase in maximum penalties for statutory violations to be in force from 15 January 2021, as required by the Federal Civil Penalties Inflation Adjustment Act of 2015. The increases are tied to the rate of inflation. Maximum penalties for knowing and willful violations of the Shipping Act will increase to $61,820, from $61,098; and, maximum penalties for violations that are not knowing and willful will increase to $12,363 from $12,219.

In terms of civil penalties, a check in FMC’s records revealed the last collection was $500,000 from four carriers in 2019. A bigger sum at slightly over $600,000 was in 2018 from 8 carriers. These records unfortunately suggest the penalty sums pale in comparison to the mega dollar revenues from their “surcharges”. The penalties in other words, are affordable sacrifices for both jumbo shipowners and charterers now.

 

Marine Online News Team
Please email us at marketing@marineonline.com to contact the author for this article.

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