High season surcharge: $3,600! Long term large shippers are being reaped as well
Container lines signed annual contracts with shippers in May, setting a contract price of $1,400 to $1,800 per large container (40-foot container) on the West American route. This week, however, spot market rates have surged to more than five times the long rate, reaching $7,200-7,400, a spread of up to $5,800.
In response to this market change, shipping lines have taken steps to increase the Peak season surcharge (PSS) in two phases from this month. Moreover, the surcharge is scheduled to be substantially increased again on July 1 to accelerate the closing of the gap with spot market rates.
On January 1, the shipping company first introduced a peak season surcharge (PSS) of $600 per container for customers with long contracts. Then, another $1,000 was levied on April 15. In addition, the shipping company has informed shippers that it plans to add a peak season surcharge of $2,000 to $2,500 from July 1. If the actual increase in the amount of $2,000, then the original long-term price of $1,600 for large shippers, the actual need to pay freight will increase to $5,200, of which the peak season surcharge of $3,600.
From the beginning of April this year, the shipping company and direct passenger and freight forwarding companies have signed the annual long contract effective from May. Although the spot market freight rate of the western U.S. line reached $3,400 per large box at the end of March due to the Red Sea crisis, and the eastern U.S. line was as high as $4,400, supply is expected to exceed demand due to the excessive number of new ships this year. Therefore, led by the super large direct passenger, the freight rate per large box only agreed to increase by $100 to $200 compared with last year's long price.
The US Business Daily reported in early April that super-large direct passengers on US routes signed new annual long contracts with shipping companies effective from May. The long price of each large box on the West American route is about $1400-1450, and the East American route is on this basis, plus $800-900, which is an increase of about $200 compared with $1200-1300 last year.
At that time, freight forwarders estimated that the long contract price signed by large direct customers with large freight forwarders was about $1,500-1,600, while the long contract price of other shippers was between $1,700-1,800.
However, the fixed rate that freight forwarders can get is usually only 20 to 40 percent of their total cargo. In the high season, this proportion can be as low as 20%, and in the low season it can reach 40%. The remaining cargo is charged at the spot market flat rate (FAK).
However, when imposing peak season surcharges (PSS) on super large and large direct passengers or freight forwarders, shipping companies will take into account the status and cooperation with these customers, and provide them with certain flexible prices. Some super large freight forwarders said that the actual amount of PSS levied is sometimes lower than the original predetermined price, which shows that some shipping companies attach importance to long-term customers.
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