What It Means If The Ocean Carriers Are Targeted By The Government
Since the start of the COVID-19 pandemic, international shipping has caused a headache for the manufacturing and shipping industries alike. Rates for ocean shipping have risen so high that the United States government may intervene to lower prices. While doing so can help get supply lines back on track, there may be some negative side effects that impact everyone in the supply chain.
Why Are Rates So High?
Since the start of the pandemic, it’s not hard to find importers who have paid up to $20,000 to move one container from Asia to the United States. Market factors, such as low pre-pandemic demand resulting in less capacity, and a massive boom in e-commerce spending, are some of the root causes. Lack of competition among ocean carriers also shoulders some of the blame.
The Joe Biden administration believes the small number of players in the rail and ocean shipping industries has contributed to high prices. Three major carrier alliances control nearly 80% of the shipping market, which allows the companies to extract higher rates. In order to combat these high rates, there have been talks of government intervention. One suggested solution is the restriction of detention and demurrage fees.
Detention and Demurrage
Shippers have complained about detention and demurrage charges since their inception. While these charges have always been subject to scrutiny, the COVID-19 pandemic has only strengthened this scrutiny. It’s gotten so bad that the Federal Maritime Commission plans to audit nine container carrier markets to find out if they’re overcharging shippers on detention and demurrage fees.
Detention and demurrage fees exist to ensure the equipment is returned to carriers in a timely fashion, but the exploitation of these fees could be leading to exuberant rates. The issue with restricting these fees, which the Biden administration has discussed, is that it puts the carriers at risk. To compensate for decreased detention and demurrage fees, carriers could charge a daily fee for the usage of containers, or they could only accept cargo CY-CY (container yard to container yard). While this would protect shippers from exuberant expenses, it could complicate the process in the long run.
How Does This Affect Business Owners?
If you are a business owner, you don’t need us to go on and on about issues in the supply line; you have been living it. As consumer demand continues to increase, you need to be sure your shipping needs are met. Delays in the supply line can lead to empty shelves, which impact your bottom line.
Increased shipping costs also impact your bottom line and complicate time-critical logistics. With the holiday season looming, you need to be sure someone will meet your shipping needs in a timely manner.
How Trifecta Transport Can Help Your Business
Understanding the ins and outs of the shipping industry is next to impossible, especially considering your busy work schedule. That’s why our team at Trifecta Transport is here to help. We’re here to streamline your logistics process in order to save you time, money, and headaches from shipping-induced stress.
We book, track, and manage your shipments, all while working within your budget. Our team features specialized departments for each logistics sector, so you get the best shipping method possible based on cost and requirements. During these difficult times for business owners, we want you to be sure your shipping needs are met.
Contact Trifecta Transport Today
If you’re looking for an all-in-one solution for your shipping needs, Trifecta Transport is here to help. Give us a call at 1-800-469-1428, or email us at email@example.com to find out how our services can benefit your business. We work with carriers in the United States, Mexico, and Canada. We look forward to working with you!