How Obstacles With Ocean Freight Are Affecting Freight Budgets

Aug 5, 2020

Like the terminator, the perfect storm is back, but this time it’s hitting the ocean market and freight budgets.

For example, in early June one shipper told us they paid $1800 to move a container from China to Los Angeles. Two weeks later the price to move their containers skyrocketed to $3300 per container as the carriers imposed significant surcharges. Then two weeks ago, I received an e-mail from a CEO buddy asking if the delays they were experiencing in getting their containers from overseas were attributable to COVID–19 issues.

Add it all up and you understand why we’ve been getting lots of calls from C-Suite executives asking for help understanding what’s happening with the ocean carriers. To shed light on this topic, we reached out to our friend John Janson, the Director of Global Supply Chain at SanMar—a U.S. apparel distributor and top 100 importer.

In this interview, John offers many great insights into what shippers are seeing right now in the ocean transportation marketplace. Ocean carriers are managing capacity through blank sailings and as noted above, imposing the equivalent of peak season surcharges— even though the peak season has yet to begin. In case you're not familiar with blank sailings, in this informative interview John explains how it affects capacity. Additionally here is a great article from the JOC that explains what the FMC is doing about blank sailings.

Overall, shippers are finding it challenging to ship on time and on budget as a result of this perfect storm. But don't get discouraged! John offers some great advice for navigating these times and making sure you can keep your supply chain moving, and he lays out three simple steps your company can take right now to become a shipper of choice for your ocean carriers.

And if you would like some other great resources, Lori Fellmer heads up the NIT League’s Ocean Committee and she and her Committee are doing a dynamite job of keeping shippers in the loop about important issues in the ocean sector. Check out the League’s website to learn more.