Hapag-Lloyd chief executive Rolf Habben Jansen appears to be ruling out the prospect of renegotiating container freight contracts.
There has been talk that shippers are seeking better deals as spot rates have fallen beneath long-term rates.
But the boss of the Hamburg-based liner company sees no value in accepting lower than agreed terms.
“There is always a risk the spot rates are lower; that is not a reason to lower contract rates,” Habben Jansen told analysts yesterday.
He conceded that the company had signed more long-term contracts than might have been inked before the pandemic.
But any renegotiation of contracts would simply mean agreeing on a spot rate “plus a downward adjustment if the rate is lower”.
“That doesn’t make any sense — that’s why you have the two types of contracts,” he added.
‘Strategic openings’
Talk of shippers looking to move to the cheaper spot rates has heightened as spot and long-term rates continue to converge.
That trend has been most visible on the trade from Asia to the US West Coast (USWC), where short-term rates are already below long-term prices, according to Xeneta analyst Peter Sand.
The same “negative spread” is likely later in August on the trade from Asia to the US East Coast (USEC) trade, he said.
The convergence of rates is being mirrored across a number of key global trade corridors.
“The spread between the long and short-term rates is diminishing and, in some cases, turning negative,” Sand said.
That development could provide “new strategic openings” for ocean carriers and their customers.
“On the carrier side, they might be able to tempt those shipping large volumes from the Far East to the US to sign up to long-term contracts, instead of playing the spot market,” he said.
“On the other hand, the falling spot price gives shippers looking to improve supply chain resilience an opportunity to strike a better balance between long and short-term rate strategies.”
Spot rates to the USEC have fallen by 26.9% this year to $9,300 per 40-ft equivalent unit (feu), according to Xeneta.
To the USWC, freight rates are down 33.1% to $6,400 per feu.
The premium of almost $3,000 for shipments to the east coast is around three times higher than normal.
This demonstrates the strength of the USEC routes, where carriers are shifting capacity to counter congestion issues and bottlenecks on the west coast, according to Sand.
