US retailers face delivery delays as carriers cancel flights

Shipping companies such as MSC and Maersk are reportedly trying to cancel flights to support falling shipping rates – moves that could reportedly trigger another round of cargo delays.

After paying as much as $20,000 to ship a container of merchandise during the worst disruptions due to the pandemic, U.S. retailers are now bracing for delays as containers are shifted from one ship to another, experts say.

A major US shipping conference kicks off this week in Long Beach, California, according to Reuters. The meeting marks the unofficial start of annual shipping contract negotiations between carriers, shippers and their U.S. customers, including Amazon and Walmart.

The focus of the current global supply chain is the trade route between Asia and the US, as it is the most lucrative and contentious route for carriers.

In January, the Port of Los Angeles reported 17 canceled flights. The move forced Californian consumer goods companies such as MGA Entertainment, the world famous toy and doll maker, to change about 75% of products like Rainbow High and LOL Surprise! dolls from the long-term contract market to the short-term spot market.


Sea containers unload at the Port of Long Beach-Port Los Angeles complex in 2021.
Shipping containers unload at the Long Beach Port of Los Angeles complex in 2021.
REUTERS

“If (carriers) keep colliding with containers, we could miss Christmas,” Isaac Larian, chief executive of MGA Entertainment, told Reuters.

The company pays about $1,150 per container, Larian said, saving more than $18,000 over peak periods.

During the pandemic, spot rates from Asia to the US West Coast rose more than 15 times during the pandemic and are now back to pre-crisis levels as trade between the US and China cools, Bloomberg reported.

As pandemic-weary consumer spending shifted from goods to services, spot rates were the first to fall, closing the gap between spot and contract rates that was affected by the threat of a recession and competition to fill courts, said Peter Sand, chief analyst at Peter Sand. on the Xeneta air and sea freight rate benchmarking platform.


A large crane lifts shipping containers onto a 2-mile train at the Long Beach Container Terminal.
A large crane lifts shipping containers onto a 2-mile train at the Long Beach Container Terminal.
AP

Prior to declining demand, carriers were earning record revenues by focusing on the most profitable cargo, and critical customers had to compete for space and chartered ships like Walmart, Costco Wholesale and Dollar Tree to keep shelves in stock.

But now shippers are urging carriers to reimburse shipping costs that have been inflated.

“This is the revenge of the shippers,” said John Monroe, an industry consultant and North American spokesman for Transfar Shipping, a Singapore-based company whose investors include Chinese e-commerce giant Alibaba.

“There was a time when everyone was looking for a win-win. COVID knocked it out,” he added.

The optional nature of offshore contracts encourages customers or carriers to push for whatever they can get when leverage swings in their favor, said Lawrence Burns, a consultant who previously negotiated for Hyundai Merchant Marine.


Trucks accepting shipping containers
Shippers are urging carriers to recover inflated shipping costs.
AP

“They’ve been called too many times to the CEO’s office in the last two years. They come back for blood,” Burns said.

The so-called “revenge” can affect not only the shipping market, but also truck carriers.

At this point, freight companies convinced themselves that the freight market “was different this time” and that their pricing ability would continue indefinitely, according to FreightWaves.

Contract negotiations between customers and carriers are infrequent, but in recent calls, officials from Walmart – the No. 1 container shipper in the US – furniture retailer La-Z-Boy, toy maker Mattel and musical instrument retailer Yamaha said they expected to benefit from the cuts. rates.

Since the latest wave of earnings reports, US retail executives have noted an improvement in logistical pressure, but according to Bloomberg, it is too early to say that the price problems are over.

With mail wires

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