Transportation & Logistics Analysis

FAK rates fall, contract rates climb

November 19 2021

The month of October saw a dip in FAK container shipping rates except in the transpacific trades. Contract rates, on the other hand, continued to rise.

The month of October was marked by still intact demand in the United States for Chinese-made products. One effect of this was that cargo terminals on the west coast became a little more congested. In a new development, east coast terminals also became affected. In Europe, demand pressure eased a little, enabling ports to escape the tensions faced by their American counterparts, even if there are still some tensions at Rotterdam, particularly for onward transportation by waterway. One exception is the United Kingdom, which is facing a situation similar to that of its US ally, with most terminals heavily congested and truckers in serious short supply.

In the face of this strong worldwide demand, the production sector is under pressure, particularly in China. Problems of access to energy and raw materials are adding to difficulties caused by a public health situation, which remains heavily dependent on the Covid-19 pandemic.

Shipping companies: A new approach to customer relations

The digital platforms lay down their dynamic pricing law more each day, with fortnightly FAK rates offered on all shipping company websites. Clients in the "small" or "intermediary" segments clearly have no other choice if they want access to space but this leads to distortion of competition with the big forwarders.

A new phenomenon will be interesting to follow: shipping lines are setting up "loyalty" systems to reward the assiduity of their digital customers. This is a radical new logic in the way freight is marketed to blur the huge rate differences seen over the summer between "small" and "large" freight forwarders. The effect of these practices is to tighten rate schedules, admittedly at high levels, but with the counterpart of stronger space and equipment access guarantees.


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Expert in Ocean shipping for 25 years, Jerome puts all his knowledge of the industry to contribution for Upply. Ship captain at heart, he has written the English-French Lexicon of Containerized Shipping (Paris: CELSE, 2001).
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