By Richie Lin    Photo：CANVA

Shipping lines have issued GRI (General Rate Increase) every two weeks since the beginning of second quarter of 2024. And they might keep issuing GRI until the of October or November. FCL rates have increased over USD 5000 per container compared with the numbers at the end of March.

For example, one 40GP from Asian base ports to Los Angeles will cost USD 8200 between July 1st to July 14th. The soaring of ocean freight rates has influenced the international trade significantly. The industries of low commercial values such as furniture, shoes, clothes are forced to stop arranging any containers.

Otherwise the more containers they arranged, the more money they would lose. For the importers in the USA, the ocean freight rates increase will also put heavy burdens on them. Their selling prices to the buyers usually combine the prices of products and the logistics costs from the factory to the final destinations. The ocean freight costs usually occupy major part in the logistics costs.

Importers might deal the selling prices with buyers when the ocean freight costs are comparatively low. Huge increase of ocean freight rates will eat up their profits and they might lose money if they cannot renegotiate with the buyers for new selling prices. Therefore, how to control or minimize the impacts of ocean freight rates will be very important for the importers in the USA.

For the giant companies such as Walmart, Costco, Ikea, they can use their numbers of import containers to negotiate a BCO (Beneficial Cargo Owner) contract with shipping lines directly. They can use their records with shipping lines to control the influences of rate increases. However, the story will be totally different for small and medium importers.

They don’t have the enough records of containers to attract shipping lines to deal with them directly. And they might not get any space from shipping lines during peak time even though they have contracts with shipping lines. Henceforth, small and medium importers usually contact the NVOCC, the so-called forwarders to arrange the ocean freight shipments. In the past, the importers in USA would contact the NVOCC in USA, then the NVOCC in USA would contact the NVOCC in Asia to get rates and space from shipping lines.

So, the importers could only get the second-hand prices and information from the NVOCC in USA. When the rate level keeps in low tide, this process may not make huge difference. However, Current soaring of ocean freight rates pushes the importers to think about why not contacting Asian NVOCC directly to arrange the ocean freight from Asia.

Since ocean freight rates occupy major part in the logistics costs from Asian factory to the destinations in USA, the importers shall consider contacting the logistics providers in Asian countries directly. By contacting the logistics providers in Asia, the small and medium importers in USA can acquire the first-hand prices and space allocations. It’s like buying products directly from the producers without the interferences of middlemen. Asian logistics providers can help importers to control or minimize the impacts of soaring ocean freight rates and get the first-hand space allocations. In the ocean freight industry, the rates and the space allocations are all controlled at the ports of loading not ports of discharged.

This means if the importers need to arrange container from Shanghai to LA, it’s more beneficial to contact the logistics provider in Shanghai not the one in LA. And it’s more convenient to have logistics provider in Shanghai to be the bridge between importers and factories. The importers can get the first-hand information without being blocked by the middlemen. For the sake of saving costs and communications, the importers in USA shall begin to contact with Asian logistics providers directly to arrange containers from Asia to USA.

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