A combination of factors has led to a steep climb in ocean shipping rates and new carrier fees. Post-Covid consumer demand has increased in the face of severe equipment shortages and reduced capacity on ocean carrier vessels.
Ports, truckers, and rail depots have a reduced workforce and are experiencing work stoppages due to the Covid-19 crisis. This situation has led carriers to implement new congestion fees.
In mid-July, we announced that the major ocean carriers and some rail ports would be introducing these new fees. Matson Line’s “California Port Congestion Surcharge,” MSC’s “Congestion Surcharge,” and Hapag-Loyd’s “Value-Added Surcharge” are some examples. These fees ranged from hundreds to thousands of dollars and took effect on August 1st.
At DGL, we are doing our very best to mitigate these fees where possible. We negotiate with our vendors in every phase of the supply chain to lessen the burden on our clients.
This unprecedented situation is putting tremendous pressure on importers. Skyrocketing rates, space shortages, and significant delays have put many companies in an impossible position.
Understandably, they are trying to hedge their shipping bets. Often they book with multiple forwarders, canceling shipments with one for a better rate or schedule with another. While this is an understandable response to the ongoing uncertainty, the ripple effects only add to the chaos. Carriers and forwarders have limited capacity, and they allocate it as fairly as possible to their clients. Canceled bookings mean a scramble to reallocate to other clients or blank spaces in their sailings.
Carriers have decided to institute cancellation fees as a deterrent –and the fees are purposely high.
Once your shipper/factory/agent books, forwarders commit that space to the carrier. If you cancel a booking, they must cancel with the carrier, who will charge a cancelation fee. The forwarder must pass that fee on to you.
At DGL, we are completely transparent and always include this fee in our quote, and during this crisis, all quotes for new bookings come with a caveat: We base our rates on the best available information. However, rates are regularly changing. Your rates may change by the time you book. Once we have your booking and have secured space and equipment, we will provide an updated quote. Rest assured that our rates will always be competitive within the prevailing market.
Contact us today, or call (562) 594-8988 for a consultation or free quote.
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