They have fewer resources to absorb increases and less influence to negotiate lower rates
Small importers are bearing the brunt of bottlenecks in supply chains. Long waits for delivery of goods and crippling costs are hampering the efforts of small and medium-sized businesses across the United States to benefit from the economic recovery after a difficult year, the Wall Street Journal reports .
As big retailers like Walmart and Amazon rush to restock to meet burgeoning demand from American consumers, smaller competitors are vying for tight cargo space on ships arriving from Asia. Those who want immediate shipments often have to pay around three times the cost of freight, according to accounts from traders and cargo owners.
Shipping delays and high freight rates are some of the challenges facing US businesses, which also face rising product costs and a shortage of available labor. These factors weigh especially on small businesses, which tend to have fewer resources to absorb price increases and less influence to negotiate lower rates or pass higher costs on to customers.
Things are not expected to improve in the short term. Container ship operators say that retailers began reserving spaces for goods to be sold at the end of the year holidays in June, three months before the start of the traditional peak shipping season.
“We don’t see demand going down at all,” said Narin Phol, Maersk’s managing director for North America, adding that “everyone is worried about the peak season.”
The median fee to ship a container from China to California is now at $ 6,040, up 43% from the start of this year and 344% from the start of 2020, according to the Freightos Baltic Index. The fare for a container from Asia to Europe is US $ 13,073, 130% more than at the beginning of the year.
Small US importers say they are paying even more to get their cargo onto ships. For their part, shipping executives say rising freight costs are the result of disruptions in supply chains that led to delays at ports and inland distribution networks, as retail and shipping companies Manufacturers are rushing to replenish stocks depleted during the pandemic.
The unexpected boom in demand
Rates began to rise late last (northern) summer, when Americans unable to leave home began ordering an unprecedented number of products online, such as furniture, exercise equipment, and electronics.
The rate hike accelerated as a result of the blockade of the Suez Canal in March and congestion at the ports of Southern California, Los Angeles and Long Beach, and the Chinese port of Yantian.
Some 700 vessels arrived more than a week late at West Coast ports during the first five months of 2021, compared to a combined 1,500 between 2012 and 2020, according to Sea-Intelligence.
It should be recalled that, in an executive order of July 9, the Biden government said it would pressure regulators [The Federal Maritime Commission, FMC] to deal with the anti-competitive tariffs imposed by the shipping and rail industry as part of an effort to reduce the power of big business to dominate industries.
The administration will ask the Federal Maritime Commission to fight what it calls a consolidation pattern that stifles competition and allows aggressive freight pricing. The administration claims that mergers between large shipping companies have allowed them to charge unreasonable rates.
Greater powers for FMC
FMC Chairman Dan Maffei said the Commission’s powers were limited, noting that Congress should consider giving it greater regulatory powers if it wants its authority to extend beyond intentional manipulation of rates. “I have heard of a lot of rate abuse, but I have been frustrated by the lack of cases where someone is willing to go to court and present evidence,” Maffei said. “We are quite limited in what we can do.”
Nils Haupt, a spokesman for Hapag-Lloyd, said the bottlenecks are due to limited space in warehouses, terminals and distribution centers. “Shipping lines are doing everything they can to deal with this, spending millions on extra capacity,” he said.
(July 15, 2021)
Small importers are the hardest hit by high shipping rates in the US.
Mundo Maritimo
https://www.mundomaritimo.cl/noticias/pequenos-importadores-son-los-mas-perjudicados-por-las-altas-tarifas-de-transporte-maritimo-en-eeuu
